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Financial Literacy

The worst financial decision you can make         

Inflation in Nigeria is a big issue, the prices of goods and services never come down and it is expected that prices will continue to rise in future.

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inflation rates

Keeping a huge chunk of your savings in cash is not as safe as you think it is. To make money and preserve wealth, you must invest money in interest yielding assets, or put your money in ventures that ensure productivity.

Inflation in Nigeria is a big issue, the prices of goods and services never come down and it is expected that prices will continue to rise in future and the purchasing power of your cash at hand or in the bank will buy you less in future.

It is understandable why people hold cash – fear of losing money in investments, and for unforeseen circumstances. However, we all know that banks pay a small interest on our deposit and that amount is too low to keep up with the impact of inflation and not to forget the numerous bank charges.

Presently, the interest rate on savings account in Nigeria is around 4%, while inflation has grown by an average of 11.28% so far this year, with analysts predicting that it will average of 11.40% in 2019.

[READ MORE: Brace for impact as CBN expects inflation to rise to 12%]

So where should I invest my cash?

You have to invest in assets that will beat inflation over a period of time or put your money into productive businesses because your cash will become worthless over time.

Like Ray Dalio espoused, “You can’t keep your money in cash. If you think that’s safe, you’re looking at it wrong. It’s a sure losing strategy.” He further added, “people with great ideas create productivity and get paid for it. It is better to invest in productivity than to not invest in productivity because otherwise, your money will lose buying power.”

There are lots of financial assets that have been written about on this site which you can invest in, however, my major point is to think in terms of how risky it is to just hold cash when comparing it with the value of inflation.

 Should I invest all my cash?

No, you don’t have to invest all your cash. Elementary economics teaches us that we have to hold money for transactional and precautionary motives. There would always be things we want to pay for; however, the key is to only keep enough cash in hand to cover a few months’ expenses.

[READ ALSO: This decades-old challenge will deprive Nigerian businesses AfCFTA’s benefits]

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Financial Literacy

How to grow rich with the power of profitable relationships (Part 2)

The idea that you can build rich relationships with zero value is best left at Disney land.

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Hello friends, to catch up on this topic, you can read up on the first part by clicking here. Now let’s continue…

The two rewards for solving high-income problems

There are two rewards you can get for being a high-income problem solver. The first is the value reward and the second is the cash reward.

The value reward is earned when you enter into relationships solely to extract value. This means that someone has what you need to succeed and you have what they need to succeed. And both of you are willing to enter into a value for value exchange relationship.

For example, if you need a job and you meet someone that can help you get a job. And if this person needs contacts or a certain service that you can provide. Both of you can enter into a value for value exchange relationship and solve your problems. The important thing for this kind of relationship to work is that both of you must come to the table with value. And the value must be comparable and worthy of the exchange.

The idea that you can build rich relationships with zero value is best left at Disney land. Frankly, it never truly works this way. In the corridors of wealth and power, it is value for value. This is why the rich keep getting richer. They are always exchanging value that creates more wealth. If you want to be rich or build profitable relationships you must approach relationship building this way. You must bring value to get value. And you must constantly strive to increase your personal value every day. The value for value exchange is common in the relationship among peers, friends, and business partners. It is also common in the relationship between the older and younger generation.

Right now, there are certain relationships that you need in your life. But those relationships will not just fall on your laps for nothing. You need to have what these relationships need to attract them to you. And you must become a person of value to attract them. Success in the value for value exchange relationship thus begins with first becoming a person of value.

Sometimes a financial reward is what you get in return for solving high-income problems. This is common where there is a customer involved. And where a problem can be solved using products or services. When you engage in a customer-type relationship you must offer products and services, that can solve customers’ problems in exchange for cash. And there are two ways to achieve this.

The first way is to sell your own products and services to customers. This is a slow and laborious way especially if you are a working professional. The second way is to find products and services that are already selling. And are owned by companies or organizations that you care about. And then sell them in exchange for income. This is the faster way. All you need to do here is connect people who need a solution to the companies that can offer those solutions. This is what I call Relationship Brokering and it simply means connecting two people who need each other and getting paid for your connection. To succeed as a relationship broker, you must become a value connector and this brings us to the second point.

2. Become a value connector

Becoming a value connector means connecting people with a similar problem that you have solved or are solving with the organizations that have helped you solve the problem or are helping you solve the problem in exchange for cash. It is connecting people that need help with those that can help them. And it means that you must first solve a personal problem for yourself, then partner with the company that helped you. And then find people with similar problems who are ready to solve them.

Successful value connectors thus build three kinds of relationships. They build-relationship with business owners. They build relationships with customers and they build relationships with other value connectors. The key to succeeding as a value connector or broker is to focus on solving high-income problems for yourself. And to choose companies that you have used, tested, and trusted.

You must also ensure that the company you choose has a good reward system that can help you earn a high income or at least is willing to negotiate one with you. If you do this successfully you will not only transform your life, you will transform the lives of other people and enlarge your income in the process.

The beautiful thing about being a value connector or broker is that you don’t work alone. You work in partnership with reputable organizations and people that can increase your value and credibility. All you need to do is be the one that connects people who need help with the companies that can help them.

Perhaps you are thinking to yourself where do I find these companies, how do I know which problems are high income-producing problems, how do I negotiate a reward for myself and how do I do all of these with my busy work schedule etc. The solution is to join a problem-solving platform.

Jaiz bank

3. Join a problem-solving platform. 

A problem-solving platform is a platform that exposes you to a diverse range of problem-solving opportunities that produce high income, help you build rich relationships, and develop high-income skills. This means that you don’t need to set anything up all by yourself. All you need to do is join a platform that has already set it up for you. So if you want a one-stop-shop for solving high-income problems, entering into value for value exchange relationships, or developing high-income skills our platform is the answer.

Our Relationship Brokering platform is focused on helping people solve financial, investing, retirement, wealth, business, and relationship or networking problems. So, if you want to solve any of these problems for yourself. And want to help other people solve this kind of problem in exchange for cash. You can join our platform. However, you must qualify to be considered. To learn more, send an email to info[email protected].


About the author

Grace Agada is the most sought-after Financial Planning expert in the country and is quoted frequently in leading Newspapers, magazines, and blogs. Grace is a Renowned Keynote Speaker, Author, and Column Contributor in Punch Newspaper, This Day Newspaper, Vanguard newspaper, Business Day Newspaper, Leadership Newspaper, The Tribune Newspaper, and Online Platforms like Nairametrics, Proshare, and Bellanaija. Grace is the Founder of “The University of Wealth” The author of “The Financial Freedom MBA Program”, “The Better Life in Retirement Planning Blueprint” and “The Wealthy Business Blueprint”. Grace is on a mission to shrink the middle class and populate the upper class. She has been featured on BBC Africa. Business Day TV. Inspiration FM. and inside Naijatv. And she consults for Numerous Top Organizations, Company Directors, CEOs, Senior Executives, and High-Income Professionals.

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Financial Literacy

How to pre-qualify for your banks’ Retail/SME loans

The cash flow of borrowers taken in context with the nature of their businesses is crucial in determining their loan eligibility status.

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Get a loan in 24hrs, no collateral, no plenty questions

The CBN’s directive of July 3rd 2019 compelling Nigerian Banks to maintain a Loan to Deposit Ratio (LDR) of 60%, wherein SMEs, retail, mortgage and consumer lending would be assigned a 150% weight in the computation of this LDR, has definitely been a game-changer in the industry as more commercial Banks focus on retail and SMEs to meet their lending quota in order to avoid stiff CBN sanctions that accompany noncompliance.

Indeed, the mass market has become the battleground for Nigeria’s financial institutions with institutional giants previously considered huge corporate giants jostling with Fintechs and MFBs for retail and SME customers, each outdoing themselves with mouthwatering rates and relatively easy to fulfil covenants for loans that are “a click away.” Naturally, this should be good news for the market as getting a loan has reportedly never been easier, but it is not. Most retail customers simply do not qualify for the type of loans they need.

READ: Nigerians will soon use their gold as collateral for loans – Minister

No matter the pressure from CBN, banks are still profit-making institutions that are duty-bound to protect the interest of their stakeholders, hence their need to comply with best credit practices even when disbursing the smallest of amounts as loans. Their loans are thus, only given to those who meet their requirements, whose records show favourable odds.

Here are a few ways of increasing your odds at being pre-approved for your Bank’s retail/SME loan:

READ: Interest rates of some loan apps in Nigeria

Consolidate your banking activities

If you are reading this, then I can safely guess you have an account in a Nigerian bank. If yes, then you probably have accounts with more than one bank; and you probably wear your resources thin trying to service these accounts because “they serve different purposes.” While this may be good for financial planning, it definitely works to your detriment in showing your true cash flow from your turnover.

Most retail loan applications require just one bank statement, and in the case where you may be allowed to present statements of more than one bank account for your loan application, a reviewer may suspect duplicity of transactions. Save yourself the hassles and consolidate your banking activities to one account for the purpose of your loan request; to show your capacity.

READ: 4 Nigerian banks that offer easy-to-get car loans

Ascertain your credit status

Do you have any outstanding debts owed to any financial institution? Perhaps you guaranteed a loan with your bank details or one of your abandoned accounts has a negative balance? Clear it before putting in your loan request.

Credit is mostly about character. Any financial institution willing to lend you money will make sure that you are in the habit of settling your debts, hence their need for a credit check. There are no forgotten loans in the system; whilst they may have been written off, they are not forgotten. Know your credit status today.

Build turnover and average balance

Turnover is the total amount that passes through an account within a period while the daily overnight balance on the account summed up and divided by the number of days under review is the average (daily) balance.

There is much emphasis on turnover amongst customers who seek loans; however, any credit officer worth his pay usually uses turnover in tandem with your average balance to make decisions on a loan request because the turnover addresses capacity while the average daily balance addresses available capital. Turnover may be easy to manipulate but your average daily balance is not. Build both.

READ: FG grants N22.3 billion tax credit to Dangote Cement

“Show your workings”

As simple as it sounds, this could be the most common reason why some account statements are rejected as fraudulent and the loan requests of their owners denied – because they do not show any underlying transaction or pattern. They are haphazard at best.

Jaiz bank

It has become commonplace for SME owners to use their company’s account for personal expenses; withdrawing cash with their ATM cards and hardly describing their transactions in details such that a reviewer is unable to decipher who their suppliers or customers are from their bank statement. Not even salary payments appear to be recurring on these statements, as most transactions are in cash.

Account statements like this show early signs of impropriety that will have any credit officer doubting the management competence of the loan applicant.

Bottomline

All of these points, well-observed, may get you pre-approved but no loan is disbursed without a verifiable source of repayment. Collateral will definitely help to assure the lender but the cash flow of the borrower taken in context with the nature of the business is key.

While personal loans may be approved based on account analysis, valid Know Your Customer (KYC) documentation and credit checks (depending on the amount); contracting financial experts for proper bookkeeping and development of business plans could go a long way in getting your SME loan request approved.

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