In Nigeria, there are two popular phrases people like to hear — “This man don make am o!” and then “Chai! This woman has made it in life!”
Everybody likes stories about success. And the good thing about achieving success is that it is not exclusive to some select group of people. Therefore, I make bold to tell you today that “you sef fit make am“.
But in order to make it in life, you need to heed the open secrets presented in this article. Some of them might seem very basic, something you’ve probably heard of before. But the taste of the pudding is in the eating. So, get ready to dig in.
What I’m about to reveal to you are the ideas financially successful people apply every day to make and maintain their wealth. Make yourself comfortable as we are about to begin.
Who are the rich ones?
If you want to spot the truly wealthy people, you may have to try a little bit harder. Why? The reason is because you might not find them driving the most expensive cars, buying private jets, or wearing a million dollar watch.
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Rich people are more concerned about making investments and consolidating on their wealth, instead of blowing it all away on wild shopping sprees and drunken nights. That’s exactly why they are rich in the first place. They don’t splash the cash around every chance they get. Instead, they allow their money to grow.
Want to find a financially successful person? – They are just ordinary people who work to create value, and then save and invest their earnings sensibly. They are people who live unassumingly and don’t try to show that they have it all. On the contrary, a rich person would prefer not to attract unwarranted attention. When they spend, they do so to make their life easier, not to impress themselves or anyone else. Don’t get me wrong, this doesn’t mean they don’t have a good time.
Ever wondered why some football or TV stars with 6 figure bank accounts suddenly go broke at the end of their career? Well, the answer to that can be found right here. Some people may ride fancy cars or live in big mansions, even though they are deep in debt. Soon enough, most of their earnings go into paying off debt rather than compounding.
A Rich Person’s Secrets: How They Do It
The road to wealth is open to anyone who is willing to walk it. You might realize that you are already practicing the ideas that will be presented here. If so, continue on the path. If not, it’s never too late to start.
Here’s how the rich build their wealth and keep it:
They have multiple income streams
Rich people venture into any opportunity they find profitable. They don’t receive a paycheck and go to sleep. Instead, they diversify. They also have passive income, where they let their money work for them. For instance, through real estate investments.
Multiple income streams don’t only make you richer, they make you financially secure, that no matter what happens, you have something to fall back on.
If you happen to work an office job from 8 to 5, and don’t have time for anything else, you could open a retail store where you only have to breeze in for inspections (it will pay you to have a trusted sales person in this case), or if you have the means, build a house and become a landlord. Just find any channel where your earnings can make you more money.
It’s a good idea to build yourself a decent private residence, but even wiser to have real estate that puts money in your pocket first.
They don’t always think about making a million bucks; but serving a million people
Value creation. That’s the phrase.
Why most people fail financially is that they focus too much on making money rather than on creating value. This is the reason why many fall prey to their own greed. In an effort to get rich, or get rich quick, they end up losing what they already have.
It might sound counterintuitive that to make money you’re not supposed to think about money… huh! But that’s just the fact.
Let’s say you are a business person and your purpose is to make a ton of money. You’d find every opportunity to squeeze every cent out of your customers; even cheat them if need be. The result? Dissatisfied customers. Even if you are not dishonest, you might remain stagnant at your current level.
But when your goal is to create value, you’d regularly brainstorm for productive ideas to serve your customers better, to make people want your products, or even how to reach a wider audience. You start becoming innovative. You hire experienced people and benefit from their skills and knowledge. The effect? You get positive reviews and word of mouth, attract more customers, serve better products and services, and before you know it, rise to the top of your industry as a leading brand.
Find ways to make people’s lives easier. Put your skills to work, create value, and money will flow.
They live within their means
Don’t try to keep up with the Dangote’s and Adeleke’s. Live within your means, have a plan for your money, and spend only on things you can afford. Let’s assume you make 200,000 naira every month. You shouldn’t try to spend it all before the month runs out. Save half of it and live on the other half. Practice discretion.
This also means maintaining your belongings well. Be it your car, clothes, working tools, you name it. This way, you won’t always have to spend on new stuff all the time.
When you save up, you increase your chances of grabbing a wise investment opportunity whenever it presents itself. Also, when you face hard times, you wouldn’t have to run to your rich uncle for help since you’d have something to sustain you till things go back to normal.
They keep learning
Learning never ends for the rich.
Always find ways to improve yourself. Learn new skills and new ways of doing things. Your earning power is deeply rooted in what you can offer.
Without continuous improvement, you’re heading towards creative rot. Keep pushing your earning potential through education, training, and personal development. For some, this could mean going back to school or gaining that special certificate. It could also mean stepping out of your comfort zone and trying new things. If there’s something that you find difficult, but which can help you in your field, immerse yourself in it until it gets easier.
Investing in yourself will not only make you a better person, but also help you expand your reach and grow your connections.
You don’t need to make six figures from the start before you set out on your path to financial freedom. No matter how much you earn, take the first step today and start practicing the ways of the rich.
Editor’s Note: This article was written by Tobenna Nnabeze.
DEVALUATION: CBN updates website to official rate of N360/$1
The central bank of Nigeria has devalued its official exchange rate from N307/$1 to N360/$1.
Just as Nairametrics reported, the Central Bank of Nigeria has devalued its official exchange rate from N307/$1 to N360/$1. The apex bank has now reflected this change on its website signaling a confirmation. The bank is yet to issue a press release to this effect.
The CBN has now officially devalued by 15% moving from N307/$1 to N360/$1. Depreciation at the “market-determined” I&E window is 5% having moved from N360/$1 to N380/$1
Devaluation: Nairametrics reported yesterday that the Central Bank of Nigeria (CBN) sold dollars to banks at N380/$1 in a move signifying a devaluation of the currency. Banks trading at the Investor and Exporter (I&E) window bought dollars at N360/$1 from the CBN on Friday, March 20, 2020. The I&E window is the official market where forex is traded between banks, the CBN, foreign investors, and businesses. The central bank typically buys or sells in the market as part of its intervention program.
Nairametrics also got hold of a letter from the CBN to banks informing them of the new exchange rate for dollars flowing from the International Money Transfer Operators (IMTOs). According to the CBN, IMTOs will sell to banks at N376/$1 while banks will sell to the CBN at N377/$1. The CBN will sell to BDC’s at N378/$1 while the BDC’s will sell to end-users at “no more than” N380/$1.
Single Exchange Rate: A report yesterday also suggested that the CBN also planned to move to a single exchange rate policy for determining the price of the dollar. A senior central bank official who does not want to be identified, said, ‘Today we allowed the rate at the importer and exporters (I&E) window to adjust in response to market developments.’
The central bank has now made an apparent u-turn after it had initially that the “market fundamentals do not support naira devaluation at this time” detailing reasons why it did not need to devalue.
Falling oil price: Oil prices fell to under $20 on Friday before climbing back up to settle at $23 per barrel. Nigeria’s Bonny light trades at $26 while the benchmark Brent crude trades at $29 per barrel. In response to the crash in oil price, Nigeria’s announced a cut to its 2020 budget by N1.5 trillion as it faced the reality of a potential drop in its revenues. Nairametrics also has information that state governments are getting jittery about their ability to sustain salary payments as a reduction in their federal allocation “FAAC” is anticipated.
Investment options for salary earners
Investment options for the salary earners
#Investing #Entrepreneurs #Investment #Salary #Wages
Recently, one of the readers of my articles asked to know what investment options are open to salary earners. A salaried individual is like everyone else except that he or she has a fixed monthly income. This implies that their investments and expenses have to be managed strictly according to their fixed monthly income.
Since salary is assumed to be the only source of income for the salaried, it is advisable that such an individual fortify himself financially before investing so that adverse investment performance will not have untold effect on him and his family. Therefore, if you are a salaried prospective investor, you need to:
Get life insurance
Most families in Nigeria are single income families so much such that if anything bad happens to the income earner, the family gets shattered, at least financially. Again, given the risks inherent in capital market investments, it is only prudent to have a life insurance as a first step in one’s investment journey. It is very baffling to see many investors very deep into the market, yet they do not have life insurance.
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Life insurance is and should be a basic part of any financial plan. Life insurance is a protection for loved ones against financial hardship arising from the death of a breadwinner. This is even more important today than ever before with high cost of funeral expenses, college education and medical bills. So, the first investment option for a salaried individual is to get a life insurance.
Prepare for financial emergencies
Life is full of surprises, emergencies do happen, jobs are lost without notices, and even good investment opportunities emerge sometimes suddenly. There is, therefore, the need for a cash reserve to help weather the financial storms and emergencies when they come calling.
Cash reserves do not only provide for emergencies, they also help to ensure that investments are not liquidated prematurely or at inopportune times to cover unexpected expenses. There are no hard and fast rules on what the exact amount of the required cash reserve should be, but most financial experts and planners will advise that an amount that equals about six months of living expenses be set aside.
So, as a salaried person, your next investment should be to have a cash reserve. A cash reserve should not necessarily be in a savings account or under the mattress; it could be in an interest-bearing money market account, money market mutual funds with low to zero luck-up period or another form of very liquid investment that is readily convertible to cash without loss of value.
[Read Also: Understanding the risks in bond investing]
Know your risk appetite
As a salaried and fixed income individual, your risk appetite is most likely going to be low as well as your risk tolerance, although your extended family profile could change all that. You need to know or understand your risk tolerance before you engage in any capital market investment.
Your risk tolerance will and should drive the type of investments you go into. Your risk tolerance depends on your psychological makeup, your current insurance coverage, presence or absence of cash reserve, family situation, and your age among others.
Talking about family situation, it is reasonable to think that a married individual whose children are still in school will be more risk averse than an unmarried person. On the other hand, older people have shorter investment time horizon within which to make up for any losses. the reason for this is because the older you get the less time you have to work to recoup on losses.
In that case the risk tolerance of an older man will be less than those for younger folks. Again, the more cash reserve and insurance coverage you have, the more your propensity to take risk. Now having known your risk tolerance based on the underlying factors, you can then define your investment objectives
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Set your Investment objectives/goals
Having met those essentials above, you are now ready for a serious investment plan or program. A good investment plan starts with investment objectives. Investment objectives are the force that determines what you invest in. Investment objectives range from capital preservation, to capital appreciation and constant income generation.
Capital preservation as an investment objective implies that you, the investor, aim at minimising the risk of loss by maintaining the purchasing power of your investment. So, if you are risk averse or you will need money from your investment soon for children’s education or for building a house or you are nearing retirement, this should be your objective.
Investors whose aims are to see their investment portfolios increase in real terms over a period of time are better suited for capital appreciation as an objective. This is better for investors that are more risk tolerant and those with more potential to recoup on losses along the way.
If you are already retired or nearing retirement, and therefore depend on your retirement plan supplemented by investment income, you need an investment that generates income rather than capital gains. In that case, your investment objective should be current income generation. It is always good to have investment goals stated in terms of risk and returns.
Decide on asset allocation
Armed with the knowledge of your risk appetite and investment objective, you are now ready to decide on what to invest in, and how much to invest in any asset class. This takes you to asset allocation decisions. Asset allocation involves dividing an investment portfolio among different asset classes based on an investor’s financial requirements, investment objectives and risk tolerance.
A right mix of asset classes in a portfolio provides an investor with the highest probability of meeting his/her investment objectives. Asset allocation is the most important investment decision an investor can make in a portfolio because it demonstrates an investor’s understanding of his or her risk preferences and return expectations.
It is good to strive for a diversified portfolio. Unfortunately, the Nigerian market does not provide a lot of asset classes for optimal diversification, but diversification can be achieved across sectors or industries within the few asset classes in the Nigerian stock market.
Decide on how to invest
There are different ways to invest in the capital market. You can invest directly by making the stock selections by yourself, thanks to the online stock trading platforms that abound the world over. This implies that you have what it takes to conduct the required research and analysis of the companies whose shares or stocks you wish to buy.
[Read Also: How I Would Invest My Mother’s Retirement Funds]
It also implies that you have what it takes to know when to sell or add to existing positions. Another method is to have someone “do the heavy lifting” for you. In this case, that someone, often times called fund manager or portfolio manager, does the research and analysis and selects shares that suit your investment preferences, investment objectives, risk tolerance and appetite as well as your investment time horizon.
This route is most suitable for investors that lack the knowledge and time for the required research and analysis. If you decide to go this route, mutual funds are the best bet for you.
Atiku kicks as Buhari spends $3.7 billion in foreign debt service since 2015
The Buhari led government has spent about $3.7 billion in foreign debt service since 2015, one of the highest from any democratically elected government. The highest single-year foreign debt service was in 2006 at $1.79 billion.
About 68% of Nigeria’s foreign-denominated debt servicing is in commercial Eurobonds issues over the last two years. The loans range between 5.1% and 9.2% per annum. Nigeria’s external debt stock stood at $27 billion in June 2019.
Rising debt service: The Buhari administration has so far spent about $1.1 billion in foreign debt service this year. In 2018, the government spent about $1.4 billion in debt service, more than 3 times the $444 million it spent servicing foreign debts in 2017. The rising cost of debt service is a direct attribute of the government’s reliance on foreign loans as a means of funding government expenditure.
Foreign Loans: Nigeria’s fallen revenue following the crash in oil price has allowed President Buhari to rely mainly on foreign loans to fund government expenditure. As of June 2015, Nigeria’s foreign loans were about $10.5 billion mostly made up of multilateral and bilateral loans.
However, by June 2019, total foreign-denominated loans were $27 billion with $10.8 billion made up of Eurobonds. Commercial loans which include Eurobonds and Diaspora bonds make now make up about 42% of total foreign borrowings.
Critics of the government have complained about the government penchant for debts believing that it could put the future of younger Nigerians in jeopardy. Supporters of the government, however, believe the borrowing was necessary to invest in critical sectors of the economy particularly infrastructure.
Recently, Director-General of MAN, Segun Ajayi-Kadir expressed worry about Nigeria’s rising debt.
“….the rising debt profile of Nigeria continues to be a cause for concern, especially the capacity of government to effectively service it and, at the same time, meet the bursting needs and aspiration of the citizenry going forward.”
“Already, our budget projections for 2020 anticipates a debt service sum of 2.45trillion, an amount higher than the 2.14 trillion earmarked for capital expenditure.
“And even though our debt-to-Gross Domestic Product (GDP) ratio, which currently stands at 28 percent, is still below the average in Africa, our revenue-to-GDP ratio remains low.”
The Finance Minister Zainab Ahmed however, believes the current debt profile is sustainable, comparing it to our GDP.
“Currently, Nigeria’s debt is at N25 trillion; that is about $83 billion. And at $83 billion, we are just at 18.99%…so 19% debt to GDP. I hear people say Nigeria has a debt problem. We don’t have a debt problem. What we have is a revenue challenge and the whole of this government is currently working on how to enhance our revenues, to ensure that we meet our obligation to service government as well as to service debt.”
Former Vice President and defeated PDP Presidential aspirant, Atiku Abubakar during the week piled criticism on the government’s borrowing.
“I have said it time and again. The business of government is too serious to be left in the hands of politicians. We must all ask questions because if they throw away the future, it is not going to be their future they are throwing away, it will be all our futures.
“The fact that Nigeria currently budgets more money for debt servicing (N2.7 trillion), than we do on capital expenditure (N2.4 trillion) is already an indicator that we have borrowed more money than we can afford to borrow. And the thing is that debt servicing is not debt repayment. Debt servicing just means that we are paying the barest minimum allowable by our creditors.
What this means: Nigeria’s rising foreign debt profile should be a worry to investors and businesses and must be watched closely. The country’s ability to repay these loans will continue to be harder as it increases especially now that it is costing about 9%. The immediate risk for investors is the exchange rate which could be the first to suffer should the government struggle to repay its loans.