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How To Choose Whether To Buy A Car or Rent An Apartment

How To Choose Whether To Buy A Car or Rent An Apartment



buy a car or rent an apartment

Bode is faced with a decision on whether to buy a car or simply just get an accommodation. He has been living with his parents for some time now and thinks now is the best time for him to move. He also needs a car as commuting to work every day for him has been very stressful. He doesn’t know how long he can keep jumping buses and hitching rides. His dilemma is compounded by the fact that his two most immediate needs are mutually exclusive. He only has enough money to fund either of rent or a car and not both or so he thought.

How often do we find ourselves in this situations and rather than apply common sense we let our emotions and subsequently indecision influence us to make wrong decisions. I believe there is a better way to handle this dilemma facing Bode. Let’s explore some of them.


Which is absolutely more critical?

One of the most important thing you must do is determine which one is absolutely more critical. If for example, you are squatting with friends or a relative and have been given a deadline to move out then getting accommodation is absolutely more crucial especially if you do not have an alternative. You certainly can’t live in a car for too long. Looking at things this way helps you rank needs in order of priority. It also requires that you think less of your emotional attachment to either a car or an accommodation.

Opportunity cost?

Understanding which of the two cost more if left undone is also a very good metric for easier decision-making. For example, if you decide to pay for an accommodation will it mean spending more on transportation and suffering a lot more in terms of inconvenience? Using Bode’s example above, he still stays with his parents and his reason for wanting to leave is probably because he needs his space and independence. Therefore, if it is more inconvenient for him to jump buses than it is for him to live with his parents then I’d rather he bought a car.

Which will be more difficult to get if you miss the opportunity?

There are some opportunities that are presented to us that when lost is hard to come by again. When faced with the dilemma of whether to get a house or a car, I suggest you also ask yourself which will be easier to defer and still have the opportunity to buy or pay for. For example, you might get a house in a choice neighborhood at a fairly good rent. It may even be that you just love the house. Not taking it now may mean not getting that opportunity again. It could also be that the car itself is coming at a very good price considering its market value and not buying it now may mean the opportunity is lost forever. Understanding wants and scarcity this way helps you also make the right judgment call.

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Which cost less

You can’t be considering this decision without finding out the cost of taking either decision. The absolute cost and carrying cost of the two options are also very important to consider be taking that decision. If you buy a car as against renting a house, will you have the money to maintain the car? If it is a house, are you now able to pay your light bills, water bills, maintain the house, furnish it and even afford the next due rent? This might all look very unnecessary considering the urge to just take a decision but it’s important to assess the cost implication of either options.

What are the Substitutes?

Most things in life have natural substitutes. An alternative to buying a car for example may be to get a cheaper one, a lower model car or even a fairly used car. If avoiding public transportation is your ultimate goal then it hardly matters what sort of car you buy. Thinking this way broadens your mind and gives you a wide range of options to choose from. Same goes for a house too. You can decide to rent a two bedroom or three bedroom apartment. Or you choose to live in a relatively cheaper neighborhood. This all depends on if your compelling reason for looking for an accommodation. I know some people who would rather live in a one bedroom apartment just because they love the neighborhood and would rather not move to a cheaper area even if it’s a bigger apartment. Your principle will guide what is the right substitute.

Which one gives you peace of mind?

In making a decision, you also do not want to forgo buying a car (or a house) if not buying it will constantly make you unhappy. That alone is punishment which you could end up suffering till you get what you want. Imagine, not buying a car and every day you come back home late, tired, smelly and frowning. There is every likelihood that you will soon start to hate the house. Same for if you buy a car when what your heart really wants is an accommodation. This is also an important metric to consider even if it isn’t as crucial as the rest.

This article originally appeared on Nairametrics on August 8, 2014




Nairametrics is Nigeria's top business news and financial analysis website. We focus on providing resources that help small businesses and retail investors make better investing decisions. Nairametrics is updated daily by a team of professionals. Post updated as "Nairametrics" are published by our Editorial Board.



  1. Leye

    August 8, 2014 at 10:07 am

    This is a well written article but it has only made me more confused. lol. I think you should just go with your heart. Whatever matters more to you, thats what you should spend on. Happiness is key. But while you’re trying to decide make you can make some money in the stock market by trading online. Rgister here

  2. flexzyflows

    December 29, 2014 at 11:40 pm

    priority z de foundation of prosperity

  3. Dare Akinola

    February 3, 2015 at 2:29 pm

    I always advise you go for what you do not have rather than spend on what you have already.

    In this case, i believe buying a car is more rational since he leaves with his parents.

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Nigeria’s Fund Industry Remain Resilient Amid COVID-19 Concerns

COVID 19 has done some devastating damage to the economy, One industry in Nigeria that has remained resilient in spite of it all is the mutual fund industry. 



Nigeria’s Fund Industry Remain Resilient Amid COVID 19 Concerns

There is no doubt that COVID-19 has done some devastating damage to various parts of the Nigerian economy and indeed, the world economy. Price of oil fell so much such that, buyers were figuratively or literarily being begged to buy, stock markets became jittery, unemployment rate spiked, the need for social services skyrocketed, the list goes on and on.

One industry in Nigeria that has remained resilient in spite of it all, is the mutual fund industry.  The health and wellbeing of the asset management industry is usually measured or gauged with trends in inflow, outflows, and total Net Asset Value (NAV).


Using those metrics as a measure of the extent to which the Coronavirus impacted the industry, one can say that the mutual fund industry in Nigeria is alive and well, and is defying all the odds against a virulent virus that visited the world with vengeance. Before the advent of COVID-19, early in 2020, the total asset value of Nigeria’s mutual funds stood at N1.042 trillion (according to the December 27th 2019 edition of NAV Summary Report from the SEC). Fast forward to May 15th 2020, after COVID-19 took hold on the world economy, the total net asset value of mutual funds in Nigeria has increased to N1.31 trillion. This represents an increase of N270 billion or 26%

Fund Flows: Of the N270 billion increase in asset value, N260.5 billion came from increase in net flows while N9.5 billion came from investments returns. The fact that the industry saw a positive inflow of that magnitude in periods where people were almost at the verge of dipping hands into their savings and investments is indicative of how resilient the industry has been. Although the industry was shaken by the effects of the virus and the trends in the oil market between March and April, it regained its strength towards the end of April and has since maintained a positive trend.

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Flight to Safety: In what looked like flight to safety, much of the positive fund flows went to Bond Funds and Money Market Funds. While Money Market Funds recorded a year to date net positive flow of N97.5 billion, Bond Funds generated N110.4 billion in net inflows. This is the first time any fund category is generating more positive flows than the Money Market Fund category. The reason could be because yields on bond funds are slightly better than what is obtainable from money market funds. Eurobond funds, recorded N12 billion in positive net flows while Infrastructure fund category saw N27 billion come in.

(READ MORE: What you need to know as banks rebrand CBN intervention funds to woo borrowers)

Performance Indicators: In an apparent justification for the flight to safety, almost all funds under the equity fund category made losses except ACAP Canary Growth fund and PACAM Equity fund. In all, that category of funds has lost an estimated N1.2 billion within the period under review. On the other hand, only 6 out of the 21 Bond funds made losses as that category of funds gathered an estimated gain of N3.5 billion. Eurobond funds seem to be basking in the euphoria of Naira devaluation as they gain massively from what is lost from the value erosion in the Naira. The Eurobond category generated an estimated N9.8 billion from January to May 15th 2020. It does look like this category of fund may be a good hedge against Naira devaluation. Much of the gains however, came from Stanbic IBTC Dollar fund and United Capital Euro Bond fund.

Nigeria’s Fund Industry Remain Resilient Amid COVID 19 Concerns

Though there are pockets of gains by some funds, most of the categories made lose within the period under review, arising mostly from their increased exposure to the equity market.


Elsewhere in the World: This trend does not seem to be peculiar to Nigeria. Recent news from Canada indicates that Canadian Pension Plans defied the COVID-19 menace and added $17 billion to increase the total net asset value to $409 billion, as at March 31st 2020. Like the Nigerian mutual fund industry, $5.5 billion of the increase in Canada’s pension plans came from contributions or net flows while $12.1 billion was as a result of positive performance.


Future Expectations: The year 2020 is still too young and the world economy too volatile for credible prediction, one can therefore not say with great certainty if the yield driven funds like the Bond Funds and Money Market Funds will maintain the momentum in generating positive gains. In terms of generating positive net flows, it does look like that trend will continue till the end of the year when it becomes clearer what direction the world economy will be heading to following the devastating effects of COVID-19. Until then, we are watching.


  • This analysis is based solely on data obtained and obtainable from the Security and Exchange Commission, Nigeria





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New Gold ETF, Vetiva, others lead best performing mutual funds in 2019

Knowing how good or bad your mutual fund is doing in comparison with its peers, (peer comparison), helps you to know if you should continue with your current investment manager or not.



Nine funds that joined the league of mutual funds in 2019, Nigeria’s best performing mutual funds in 2019

As stock-taking and post mortem analysis of 2019 continues, analysts at Quantitative Financial Analysis have gone through their analysis tools to filter Nigerian mutual funds according to their performances in 2019. In one of my articles on why you should measure the performance of your portfolio of investment, I gave some convincing reasons for doing just that.

If you do not know where you are, in relation to your investment, you may not know if the strategy you are following will lead you to the promised land of investment goals. So, knowing the performance of your investment helps you know when to engage in any form of strategy shift or portfolio rebalancing.


Nine funds that joined the league of mutual funds in 2019

Knowing how good or bad your mutual fund is doing in comparison with its peers, (peer comparison), helps you to know if you should continue with your current investment manager if you need to try another one, or even diversify across managers. The performance of your portfolio helps you know whether your asset selection is good enough in helping you achieve your financial goals.

Unfortunately, one bad part of knowing the performance of your fund is that it can make you sad, especially if you are losing money. With that summary of the need to know how your fund is doing, it may be imperative to warn you upfront that past performance is not a guarantee of future performance. This analysis is made on a compilation of fund data released by the Securities and Exchange Commission (SEC).

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[READ MORE: Fund of funds, missing link in Nigeria’s mutual fund industry)

New Gold ETF leads the pack: In 2019, New Gold Etf took the lead as the best performing fund with a return of 161%, having ended the year at a unit price of N5,220 from previous year end close of N2,000. New Gold ETF is about the most volatile fund in Nigeria, and its risk-reward ratio is 19.33 to 16.55.

Vetiva Sovereign Bond ETF blazed the trail as the second best performing fund after recording a performance of 26.39%, by ending the year at unit price of N202.44 from its previous year-end close of N159.85. The fund, which benefits from positive price changes and exchange rate volatility, has a risk-reward ratio of 2.74 to 7.52.

United Capital Euro Bond Fund recorded a performance of 23.83% to take the third position of best fund performers. Again, benefiting from the volatility in the local currency, the fund rose from a previous year-end close of N32,904.26 to end 2019 at N40,746.82. On the risk-reward spectrum, the fund stands at 2.52 to 6.79.

Does size affect performance?  In many endeavours in life, the question of whether size affects performance always rears its ugly head at one time or the other. In the mutual fund arena, that question often comes to investors’ minds when looking at funds to invest in.


Though the effect of size on performance is a topic I would like to write in more detail about, suffice it to say here that only one of the many funds being managed by the largest asset management company in Nigeria, the Stanbic IBTC Asset Management company, made it to the list of high performers in 2019.


Even at that, its flagship fund, the Stanbic IBTC Absolute fund, ended up at the ninth position out of the ten best performing funds. That begs the question, does size matter? Be that as it may, below is the list of the 10 best performing mutual funds in 2019.

Best Performing Fund

  • Name of Fund: New Gold ETF
  • YTD Performance %:  161%
  • YTD Gain per unit:  N3,220

Second Best Performing Fund

  • Name of Fund: Afrinvest Equity Fund
  • YTD Performance %:  47.62%
  • YTD Gain per unit:  N47.62

Second Best Performing Fund

  • Name of Fund: Vetiva S&P Nigeria Sovereign Bond Fund
  • YTD Performance %:  26.39%
  • YTD Gain per unit:  N42.19

Third Best Performing Fund

  • Name of Fund: United Capital Euro Bond Fund
  • YTD Performance %:  23.83%
  • YTD Gain per unit:  N7,842.56

Fourth Best Performing Fund

  • Name of Fund: ACAP Income Fund
  • YTD Performance %:  22.34%
  • YTD Gain per unit:  N0.14

Fifth Best Performing Fund

  • Name of Fund: Coronation Fixed Fund
  • YTD Performance %:  15.73%
  • YTD Gain per unit:  N0.18

Mutual Funds, Mutual Fund gone bad: Nigerian investor discloses his 10 years investment that nosedived , Nigeria’s mutual fund asset value reaches N1 Trillion

[READ ALSO: Vantage, IBTC, PACAM, Legacy, 5 others join mutual funds league in 2019)

Sixth Best Performing Fund

  • Name of Fund: Nigeria International Debt Fund
  • YTD Performance %:  14.77%
  • YTD Gain per unit:  N40.37

Seven Best Performing Fund

  • Name of Fund: Kedari Investment Fund
  • YTD Performance %:  14.68%
  • YTD Gain per unit:  N18.37 

Eight Best Performing Fund

  • Name of Fund: Stanbic IBTC Absolute Fund
  • YTD Performance %:  13.88%
  • YTD Gain per unit:  N453

Nine Best Performing Fund

  • Name of Fund: Legacy Short Maturity Fund
  • YTD Performance %:  12.65%
  • YTD Gain per unit:  N0.41

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Fund of funds, missing link in Nigeria’s mutual fund industry

Fund of funds, missing link in Nigeria’s mutual fund industry



mutual fund fees

The Nigerian mutual fund industry has come a long way. From one fund with less than N20 million in 1991 to over 100 funds spanning about 6 categories and over one trillion Naira. Nigerian investors and fund management companies deserve some kudos. The industry has equity funds, fixed income or bond funds, exchange-traded funds, Eurobond funds, and even target-date funds. One type of fund that seems to be missing from the roll call of funds is fund of funds.

What is a fund of funds?

A fund of mutual funds, or just fund of funds, is a mutual fund or hedge fund that invests in other mutual or hedge funds? So rather than investing in securities of different types like equities, bonds or treasury bills, a fund of funds buys into other mutual funds. It owns a percentage of another mutual or hedge fund. Fund of funds are also called multimanager funds because the fund manager of the fund of funds invests in funds being managed by other fund managers.

Nine funds that joined the league of mutual funds in 2019

Why invest in fund of funds?

The major reason why an investor would like to invest in a fund of funds is to achieve a higher level of diversification. By investing in a fund of funds that invests in 4 other mutual funds comprising, for example, an equity fund, a fixed-income fund, a money market fund and a Eurobond fund, you are indirectly invested in all four funds. Another reason or advantage that will accrue to a fund of funds investor is that of reduced volatility.

As noted above, your investment in a fund of funds that invests in the four categories of funds noted above will not be as volatile as each of the funds because the high volatility of the equity fund, for example, will tend to be diluted by the low volatility of money market or fixed income fund.

In addition to those advantages, by investing in fund of funds, the investor will have access to different fund managers with varying investment management experiences. Because the fund of funds manager does not just invest without appropriate due diligence, by investing in a fund of funds, an investor bypasses the need to do, and the pressure of doing, due diligence on funds.

[READ MORE: Vantage, IBTC, PACAM, Legacy, 5 others join mutual funds league in 2019)

Disadvantages of fund of funds

As already noted, fund of funds investment presents advantages, but it does have disadvantages too. The major disadvantage is that of double layer of fees. Ordinarily, as an investor, you pay management, audit, admin, legal and other fees when you invest in a mutual fund. With investment in fund of funds, you will directly pay those fees in the fund of funds and indirectly pay those fees too in the different funds that the fund of funds invests in.

This double layer of fees can be removed or reduced, if the fund of funds manager can get favourably negotiated fees from the mutual funds it invests in. Although mutual funds in Nigeria are not transparent with the types of assets they invest in, investment in fund of funds increases that lack of transparency because more often than not, you only know what funds the fund of funds invests in and not what those other funds invest in. Given the general lack of transparency by Nigerian fund managers, that is not actually a disadvantage for a fund of funds investor.

Types of fund of funds

Fund of funds can come in different types depending on their investment focus. There could be private equity fund of funds, being a fund that invests in private equity funds, mutual fund of funds invest in mutual funds, fettered fund of funds are those that invest only in the funds being managed by the management company that is managing the fund of funds while unfettered fund of funds are allowed to invest in any fund, whether managed by the fund of funds investment management company or not.


The one additional advantage that derives from a fettered fund of funds is that the expense ratio is much less than that of unfettered fund of funds because since the fettered fund of funds is managed by the same fund management company, it does not charge double fees, and even when it does, it does so at a reduced rate.

The State of the Nigerian Mutual Funds Industry

Stanbic IBTC Asset Management is uniquely positioned to offer a fettered fund of funds to investors. This advantage or unique position comes from the fact that IBTC Asset Management has many funds spread across all strategies or categories that it will be easy to construct a fund of funds that the asset management company can oversee at little or no additional fees.


The Nigerian mutual fund industry has come of age, topping N1 trillion in asset under management, and given the level of investor education in Nigeria in relation to issues like investment diversification, Nigerian fund managers should think of ways to help the not so informed investors achieve diversification. One way to do that is to create a fund of funds as a mutual fund category in Nigeria.

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