By Ola Emmanuel
“Becoming wealthy is not a matter of how much you earn, who your parents are, or what you do, it is a matter of managing your money properly”. - Noel Whittaker
In today’s piece, I am going to adopt a different style of writing. I believe this will demystify the topic in such a way to spur every serious-minded group of people unto immediate action.
An employee of Mackers Holdings Limited was concerned about the poor financial dispositions of the company’s members of staff. While relatively few knew the about savings and were enjoying the benefits of investments, the better chunk of the members of staff were living care-freely. The employee in his concern went ahead to make a proposal. Further deliberations at the management level led to the memorandum below:
In view of the well-liked maxim that ‘failure to plan is a plan to fail’, there is need for every staff of Mackers to plan for his or her financial future. This shall be achieved by everyone setting part of his or her salary apart in order to meet the future commitments; thereby reducing the future’s uncertain financial issues to a definite degree of certainty. The following posers will explain this innovation better: (i) How many of Mackers’ staff has savings? (ii) Will Mackers’ pension plan be sufficient to meet your money requirements at retirement? (iii) What are the goals of every Mackers’ staff during retirement years? Are there enough preparations for this?
“In order to encourage a better financial discipline by ways of savings, a staff investment trust fund is hereby put in place. This initiative shall be known as “Mackers Staff Savings and Investment Trust Fund (MSSITF). The trust fund shall encourage staff to save part of their salaries to meet future financial commitment and obligation; and to help Mackers staff members to invest their money in a profitable investment portfolio that promises adequate returns.
“Please note that Mackers, as a company, is not involved – and we will not allow the company to participate if it wants to. We shall choose from among ourselves (staffs) to manage our money. We will hire experts from outside to assist us. Middle level and senior staff shall contribute N5,000 while junior staff shall put in N2,000 monthly.
“To avoid temptation, your monthly contribution shall be removed from your salary at source; and Mrs Grace Solomon has been asked to be the chairman of the board that comprise 6 other members. They shall manage the fund on our behalf; so you don’t need to panic.”
The memo above explains in clear term the concept of a Trust Fund Scheme.
What is a Trust Fund Scheme?
It is a unit trust fund whereby people who are bounded together with a common structure (friendship, employment, etc) decide to take advantage of their relationship to pool money together, on regular basis, for investment purposes. The pooled money is thus invested in diversified portfolio of securities to meet the investing goals of the people. The goals and objectives of the investing relationship are clearly spelt out in the rules and regulations guiding the relationship (prospectus).
The benefits of a trust fund scheme to a willing group of people cannot be over-emphasised. These benefits include the possibility of the people in the group to maximise their savings and investment earnings through hybrid of incomes and capital appreciation which will later be shared at the determined period according to the units or proportion of members’ contributions.
The management of a Trust Fund Scheme may be handled by more than one body – appointed Trustees (comprising of a number of members picked from the investment group) and investment advisors. The appointed trustees may hire an asset management company to handle the day-to-day administration of the fund and acts as investment advisor to the trust scheme.
Enjoy my Pen, and stay financially fit.
Trainer and Public Speaker on Business Planning, Leadership, Wealth Creation, Peak Performance, Capacity Building
OLA EMMANUEL
How To Invest To Earn Extra Amount Monthly?
By Ola Emmanuel
Craig McCaw, born August 11, 1949 was the second born of his parents. A renowned communication entrepreneur and savvy investor, he found himself saddled with the responsibility of rescuing his father’s business at a tender age.
While Craig’s father was on the saddle, he was known, throughout the period of his career, to have bought and sold dozens of radio and television stations; and incurring huge debts in the process. All the four children were involved in the company as employees but Craig soon overtook the other three; and becoming a leader in managing the company.
When Craig’s father died, his mother was forced to liquidate the family businesses one by one to pay debts and taxes owed by the man; leaving a small cable system company. Craig had to take over the management of the business as a college student; and subsequently expanding the cable business and steadily switched into the new and untested field of cellular telephone service. As an investor, he had to borrow huge amount of money, and taking a risk that the portable phone would become a success. By the end of the 1980s, McCaw's Cellular One had become the best known brand in the telecom business; building a national network that had successfully put its competitors far behind.
As is known with investors, McCaw sold the cellular business to AT&T for $11.5 billion, only to embark on a more ambitious investment by embarking on a global ICT venture.
The story of Craig McCaw explains the ‘never-say-die’ attitude of a typical investor who is confronted by failing economic situations. When good investors’ income yields become inadequate, they don’t just look but rather, they seek how to improve upon their earnings. This is an issue we are going to examine today in this piece.
In the face of rising costs of living, it is necessary that everyone saddled with responsibilities improve upon his or her ability to earn. When a question is simplified, it demystifies what may ordinarily appear unworkable. So, in today’s piece, to earn at least N20,000 extra every month is to find ways to earn additional N30 every hour. One of the readers of this column sent me this question two weeks ago. As a mark of honour and respect to the person, I have removed few words from the question: “How much do I need to invest to fetch me at least N20,000 monthly? It has to be monthly because I am a parent with children”. My discussion with the person (after I got the question) warrants that I do this piece.
In a situation where more money is required to get same quantity of value (a product or service), the simple logic is for one to earn more money to enable one neutralises the effect. Where this is not possible, standard of living falls and quality of life is reduced. Being conscious of the need to earn more is about taking deliberate actions to capture the money you have been overlooking or which you don’t know exist, or which you don’t know are yours to take. To those who were at the Ibadan Investment Summit, it was a swell time as they enjoy my paper on how one can locate and possess the hidden incomes that are begging for attention.
Investment Option To Achieve The Target:
However, if this target is to be met through the option of money investment, say investment in shares, a lump sum of N1.15 million will achieve the goal if it can make 21% yield per annum. But where one cannot get the lump sum to invest at the beginning of the year, a monthly investment may be the next alternative. So how much do one needs to invest every month to achieve the target?
To achieve the goal, let situate it on these facts. The first investment will be possible after one has earned money at the end of first month. Also the 12th month income will not make any yield since it will be earned at the end of the period. So, it is 11 instalments that will earn effective rate of 0.0175% (21% per annum) in the possible number of months. Therefore, to make a money gain of N240,000 in a year (average N20,000 monthly), one should be able to make N105,104 investment every month. A better approach is to earn hybrid of incomes through maximisation of one’s potentials.
Why You Need To Increase Your Earnings:
I had mentioned it before on this page that since inflation determines the value of money one can get, it will be fool-hardy if one fails to increase earnings on his money above inflation rate. Money that cannot attract yield higher than the inflation rate is not good money. An investment that can’t return higher rate of interest cannot be seen as good one. For your money to be meaningful, it must earn above inflationary rate, say minimum four per cent higher.
So you need to increase your income? There are many ways to achieve this besides the one ideitified above. For instance, you may have to explore business opportunities around you and take up those that compliment what you are currently doing. What you need to do is figure out what you are good at. Why not find ways to monetize your skills, hobbies, or passions.
Till next week, enjoy my Pen, and stay financially fit.
Ola Emmanuel is the Publisher of Oak Magazine. A practitioner in the areas of Financial Fitness, Human/Business Development, Entrepreneurship and Academic Excellence. Contact: 08023257707; www.oakmagonline.com oakmagazine@yahoo.co.uk
Craig McCaw, born August 11, 1949 was the second born of his parents. A renowned communication entrepreneur and savvy investor, he found himself saddled with the responsibility of rescuing his father’s business at a tender age.
While Craig’s father was on the saddle, he was known, throughout the period of his career, to have bought and sold dozens of radio and television stations; and incurring huge debts in the process. All the four children were involved in the company as employees but Craig soon overtook the other three; and becoming a leader in managing the company.
When Craig’s father died, his mother was forced to liquidate the family businesses one by one to pay debts and taxes owed by the man; leaving a small cable system company. Craig had to take over the management of the business as a college student; and subsequently expanding the cable business and steadily switched into the new and untested field of cellular telephone service. As an investor, he had to borrow huge amount of money, and taking a risk that the portable phone would become a success. By the end of the 1980s, McCaw's Cellular One had become the best known brand in the telecom business; building a national network that had successfully put its competitors far behind.
As is known with investors, McCaw sold the cellular business to AT&T for $11.5 billion, only to embark on a more ambitious investment by embarking on a global ICT venture.
The story of Craig McCaw explains the ‘never-say-die’ attitude of a typical investor who is confronted by failing economic situations. When good investors’ income yields become inadequate, they don’t just look but rather, they seek how to improve upon their earnings. This is an issue we are going to examine today in this piece.
In the face of rising costs of living, it is necessary that everyone saddled with responsibilities improve upon his or her ability to earn. When a question is simplified, it demystifies what may ordinarily appear unworkable. So, in today’s piece, to earn at least N20,000 extra every month is to find ways to earn additional N30 every hour. One of the readers of this column sent me this question two weeks ago. As a mark of honour and respect to the person, I have removed few words from the question: “How much do I need to invest to fetch me at least N20,000 monthly? It has to be monthly because I am a parent with children”. My discussion with the person (after I got the question) warrants that I do this piece.
In a situation where more money is required to get same quantity of value (a product or service), the simple logic is for one to earn more money to enable one neutralises the effect. Where this is not possible, standard of living falls and quality of life is reduced. Being conscious of the need to earn more is about taking deliberate actions to capture the money you have been overlooking or which you don’t know exist, or which you don’t know are yours to take. To those who were at the Ibadan Investment Summit, it was a swell time as they enjoy my paper on how one can locate and possess the hidden incomes that are begging for attention.
Investment Option To Achieve The Target:
However, if this target is to be met through the option of money investment, say investment in shares, a lump sum of N1.15 million will achieve the goal if it can make 21% yield per annum. But where one cannot get the lump sum to invest at the beginning of the year, a monthly investment may be the next alternative. So how much do one needs to invest every month to achieve the target?
To achieve the goal, let situate it on these facts. The first investment will be possible after one has earned money at the end of first month. Also the 12th month income will not make any yield since it will be earned at the end of the period. So, it is 11 instalments that will earn effective rate of 0.0175% (21% per annum) in the possible number of months. Therefore, to make a money gain of N240,000 in a year (average N20,000 monthly), one should be able to make N105,104 investment every month. A better approach is to earn hybrid of incomes through maximisation of one’s potentials.
Why You Need To Increase Your Earnings:
I had mentioned it before on this page that since inflation determines the value of money one can get, it will be fool-hardy if one fails to increase earnings on his money above inflation rate. Money that cannot attract yield higher than the inflation rate is not good money. An investment that can’t return higher rate of interest cannot be seen as good one. For your money to be meaningful, it must earn above inflationary rate, say minimum four per cent higher.
So you need to increase your income? There are many ways to achieve this besides the one ideitified above. For instance, you may have to explore business opportunities around you and take up those that compliment what you are currently doing. What you need to do is figure out what you are good at. Why not find ways to monetize your skills, hobbies, or passions.
Till next week, enjoy my Pen, and stay financially fit.
Ola Emmanuel is the Publisher of Oak Magazine. A practitioner in the areas of Financial Fitness, Human/Business Development, Entrepreneurship and Academic Excellence. Contact: 08023257707; www.oakmagonline.com oakmagazine@yahoo.co.uk
Why You Must Diversify Your Investments
By Ola Emmanuel
Within a space of 30 days this year 2007, I have been opportune to give lectures on the unique qualities of joint investing to two bodies with similar investing goals and structures; the first purely made up of corporate executives while the second is a mix of businessmen and employees. The common denominator of the two meetings is a poser on the unique qualities of joint investing. In today’s piece, I will explore one of the ‘unique qualities’, though not limited to joint investing but highly important to any healthy investment. A case that is still very fresh in mind will be used to introduce my drift.
Few hours after some investors bought the shares of Cadbury Plc (last quarter 2006) the Nigerian stock market players were stunned with the news that Cadbury Plc has been involved in overstating its financials over a period of years. Within a space of hours, the hope associated with a ‘good-buy’ in expectation of capital appreciation of the stock was dashed. The share price embarked on a free fall. Quite frankly, not a few shareholders who put money on Cadbury Plc’s stock spent ruing their loss, hissing and downcast. How many investors spent the end of the year and New Year in hospital beds! In Oak Magazine analysis of ‘one-year performances of some selected stocks’ (to be released in the coming Edition 9), Cadbury Plc recorded overall market price loss of 50% in 2006. The last 12 months market performance analysis reveals that Cadbury stock recorded highest market price of N70 on August 18, 2006 while the lowest price of N27.90 was recorded on January 8, 2007.
To an investor who puts his money solely in Cadbury’s shares, last quarter 2006 is a disaster. But someone who has a basket of stocks (which Cadbury’s is part of), the performance of other stocks may reduce the effect of the bad fortune. To one, it is absolute risk bearing while to the other, it is a risk mitigated because such an investor diversifies his investments. One must be quick to point it out that investment diversification is a product of funds availability. A small, one-off investor may not have such an opportunity, but there is a way.
Risks Are Investors’ Unfriendly Companions:
As is common to all going concerns, investing is also a risky adventure. However, it is possible for one to exercise control over some risks while you can only guard against some. The economic downturn (general risk of investing) is occasioned when an economy goes bad. This you may not be able to exercise control over. Another is Inflation which destroys values and creates recessions; thus having overall negative influence on investments. Holders of non-performing stocks suffer more in this situation.
But a risk as experienced in Cadbury last quarter year 2006 is such that all investors should strive to exercise control over. This is achieved through diversification of investments. Simply put, ensure that you spread your investing fund over as many stocks or options as possible. To an institutional investor or big player in the market, this is easily achieved. But how can someone who manages to raise N5,000 diversify his investments? Then I ask: does that means small, occasional investors cannot spread their own money over several investments? This piece is not about investment risks, but why you must diversify. God willing, I will handle the issue of risks another day.
Is Investment Diversification An Exclusive Preserve of Big & Institutional Investors?
No! My philosophy is that no man is limited except he chooses to limit himself. Small money for investment do limit ability to diversify but there is always a way out. An unusual situation does need unusual ingenuity for one to overcome it. Gentle ladies and men (or whichever way you want it), it is a mater of intelligence and how willing you are to maximizing the yield (ROI) of the little money you have. Every investor, big or small, institutional or individual, can diversify. An investor who is small because of his individuality can become extremely big if he invests in a group or with a group. And it is based on this conviction that led to the establishment of Oak Magazine Investment Club (OMIC) so that individual small investors can be playing big and enjoying fully the benefits that are hitherto exclusive preserve of the big and institutional investors. For instance, a small investor who is a member of OMIC that invests N2,000 monthly is able to spread his little money over several investments; thus able to mitigate against risks. Can he spread such little amount of money if he wants to stand alone? He may even find it difficult to get a stockbroker to listen to him.
Henceforth, spread your investing risks. Make it a habit to spread your money when investing. If your money is small, join investment club. You may call in this respect.Till next week, enjoy my Pen, and stay financially fit.
Ola Emmanuel is the Publisher of Oak Magazine. A practitioner in the areas of Financial Fitness, Human/Business Development, Entrepreneurship and Academic Excellence. Contact: 08023257707; www.oakmagonline.com oakmagazine@yahoo.co.uk
Within a space of 30 days this year 2007, I have been opportune to give lectures on the unique qualities of joint investing to two bodies with similar investing goals and structures; the first purely made up of corporate executives while the second is a mix of businessmen and employees. The common denominator of the two meetings is a poser on the unique qualities of joint investing. In today’s piece, I will explore one of the ‘unique qualities’, though not limited to joint investing but highly important to any healthy investment. A case that is still very fresh in mind will be used to introduce my drift.
Few hours after some investors bought the shares of Cadbury Plc (last quarter 2006) the Nigerian stock market players were stunned with the news that Cadbury Plc has been involved in overstating its financials over a period of years. Within a space of hours, the hope associated with a ‘good-buy’ in expectation of capital appreciation of the stock was dashed. The share price embarked on a free fall. Quite frankly, not a few shareholders who put money on Cadbury Plc’s stock spent ruing their loss, hissing and downcast. How many investors spent the end of the year and New Year in hospital beds! In Oak Magazine analysis of ‘one-year performances of some selected stocks’ (to be released in the coming Edition 9), Cadbury Plc recorded overall market price loss of 50% in 2006. The last 12 months market performance analysis reveals that Cadbury stock recorded highest market price of N70 on August 18, 2006 while the lowest price of N27.90 was recorded on January 8, 2007.
To an investor who puts his money solely in Cadbury’s shares, last quarter 2006 is a disaster. But someone who has a basket of stocks (which Cadbury’s is part of), the performance of other stocks may reduce the effect of the bad fortune. To one, it is absolute risk bearing while to the other, it is a risk mitigated because such an investor diversifies his investments. One must be quick to point it out that investment diversification is a product of funds availability. A small, one-off investor may not have such an opportunity, but there is a way.
Risks Are Investors’ Unfriendly Companions:
As is common to all going concerns, investing is also a risky adventure. However, it is possible for one to exercise control over some risks while you can only guard against some. The economic downturn (general risk of investing) is occasioned when an economy goes bad. This you may not be able to exercise control over. Another is Inflation which destroys values and creates recessions; thus having overall negative influence on investments. Holders of non-performing stocks suffer more in this situation.
But a risk as experienced in Cadbury last quarter year 2006 is such that all investors should strive to exercise control over. This is achieved through diversification of investments. Simply put, ensure that you spread your investing fund over as many stocks or options as possible. To an institutional investor or big player in the market, this is easily achieved. But how can someone who manages to raise N5,000 diversify his investments? Then I ask: does that means small, occasional investors cannot spread their own money over several investments? This piece is not about investment risks, but why you must diversify. God willing, I will handle the issue of risks another day.
Is Investment Diversification An Exclusive Preserve of Big & Institutional Investors?
No! My philosophy is that no man is limited except he chooses to limit himself. Small money for investment do limit ability to diversify but there is always a way out. An unusual situation does need unusual ingenuity for one to overcome it. Gentle ladies and men (or whichever way you want it), it is a mater of intelligence and how willing you are to maximizing the yield (ROI) of the little money you have. Every investor, big or small, institutional or individual, can diversify. An investor who is small because of his individuality can become extremely big if he invests in a group or with a group. And it is based on this conviction that led to the establishment of Oak Magazine Investment Club (OMIC) so that individual small investors can be playing big and enjoying fully the benefits that are hitherto exclusive preserve of the big and institutional investors. For instance, a small investor who is a member of OMIC that invests N2,000 monthly is able to spread his little money over several investments; thus able to mitigate against risks. Can he spread such little amount of money if he wants to stand alone? He may even find it difficult to get a stockbroker to listen to him.
Henceforth, spread your investing risks. Make it a habit to spread your money when investing. If your money is small, join investment club. You may call in this respect.Till next week, enjoy my Pen, and stay financially fit.
Ola Emmanuel is the Publisher of Oak Magazine. A practitioner in the areas of Financial Fitness, Human/Business Development, Entrepreneurship and Academic Excellence. Contact: 08023257707; www.oakmagonline.com oakmagazine@yahoo.co.uk
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