Archive for October, 2007

Crash Retirement Programme II

October 31, 2007 at 8:33 pm · Filed under Nigeria, PFAs, Retirement Planning, Women and Money

  • Change your budget: you need to have a zero based budget at this stage of your life. With a zero based budget, you start from absolutely essential expenses, then move to other less essentials until you arrive at zero. Sadly, many of us concentrate on less essential expenses while we burden ourselves with a lot of unnecessary financial burden such as extravagant burial ceremonies: wedding ceremonies: aso-ebi e.t.c. Cut all these expenses and plough the money into your retirement savings. You must change your habit at this stage of your life. Do not feel guilty when you say “No” to discretionary expenses.
  • Change your job if necessary: this may not sound right to a lot of people, but remember we’re talking about a crash retirement programme. You don’t have the luxury of young age. Better job for this purpose could be the one that gives you a higher pay: the one that gives you more free time to do some personal business or a job that provides you with a better pension. These will help in quickly building your retirement fund.
  • Go Private: while I don’t encourage you to utilize your present employer’s time for your private business, you must make a better use of all your free time. Think about starting a private business on the side to enhance your income. However, don’t cheat your employer. With a private business, you secure two sources of income for yourself. The good thing about this is that you can eventually retire into your private business and fight boredom on retirement.
  • Retire Late: assuming you’re not cut out for entrepreneurship, you may consider retiring later than the standard retirement age. The longer you stay, the bigger your retirement benefit is likely to be. However, this is not the best option and in any case, your employer is not likely to retain you till the old age of 70 – 75.
  • Mind your health: I can’t say this enough. You are not getting any younger. Mind what you eat and what you do at this stage. Medical expenses can be quite high for people in your category and it’s not advisable for this to erode your retirement savings. Take medical advice on time and remember prevention is better than cure.
  • Be Realistic: when making your projections and assumptions, be as realistic as possible. Create a realistic dream for yourself. Why, for instance, would you want to ride a hummer jeep at retirement when your retirement fund can only afford a Honda City? If you can, go ahead. That’s what retirement is all about – good life. But if you can’t, why build a castle in the air?

  

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Crash Retirement Programme

October 30, 2007 at 8:38 pm · Filed under Getting Started, Nigeria, PFAs, Retirement Planning

One of the few things people worry about is the future in terms of retirement especially if you’re five years from retirement. I wrote an earlier article on retirement giving an insight into what individuals can do to buy back a bit of the time they had earlier wasted due to ignorance and non access to relevant information that may assist such individuals.

How do you know if you’re eligible for this program? You’re eligible:

·        If you’re worried about your age. You’re most likely to check the mirror every morning to count the number of new gray hairs or wrinkles you acquired while asleep the previous night.

·        You’re concerned about the little assets you possess and continuously ask yourself “what can I do?”

·        You happen to be one of those who had lived a good life in the past, you could have additional emotional problem of self-blame. The common “if I had known” thought continuously haunt you.

If you’re in this position, all hope is not yet lost. Although there’s little you can do about your past, there’s a lot you can still do before retirement. This is not the time to berate yourself for what you did wrong or right. You need to take proactive action by doing the following:

Check your needs: you need to figure out what you’ll need on retirement and compare with what you will have in retirement. You also need to decide the sum that will be adequate for your living expenses by comparing what your present living expenses are right now. If there are some items that are not really necessary, this is the time to ask yourself if you can do without these items. Learn to differentiate between your needs and wants.  Also don’t count on whatever you may receive from your children in form of financial assistance cos this may not be a regular or constant assistance. It has always been an age long belief of many Africans that their children will take care of them in old age. Often, this is rarely the case.

Save! Save! Save: I can say this a million times. You must save every kobo and naira you can, however small. Let this become your daily chore. You are no longer 25, 30 or 40 years of age; retirement is now around the corner. Saving should be your priority. You can do this via Additional Voluntary Contribution to your Retirement Savings Account (RSA). Ask your employer to increase your personal contribution to 10% or 15%. It is no longer a case of convenience but that of compulsion. Let this be your new way of life even if you’re just entering the labour market. Your latter years will be spent in bliss and peace.

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Side Business

October 28, 2007 at 8:41 pm · Filed under Entrepreneur, Getting Started, Nigeria

Lately, I’ve been toying with the idea of taking a one-year break from the 9a.m – 5p.m hustle and bustle due to various reasons. First I need to go back to school, secondly I’ll be getting married and thirdly, I intend to kick start a side business. Can I afford to take this break? By my calculations, certainly, I can cos by the time I’m making my planned exit from the labour force, my net worth will be a bit more than N10mn. So I’ve been thinking of what I’d be motivated to do on a daily and continuous basis without getting bored.

Several ideas have cropped up but one fascinating thing I’ve discovered about the Nigerian economy or business environment is the immense opportunities waiting to be tapped. This may be due to my current job role, which affords me the opportunity to interface with consumers on a daily basis. Truly, the future of this country lies with SMEs and the various products and services these small scale organizations will be offering to such a large population as ours. I intend to be part of this small pool of entrepreneurs. Most times, we spend our whole lives in search of that unique idea that will bring the million naira home but often times, there are boundless opportunities around us on a daily basis, staring us in the face that I can’t imagine so many people have not though of it. Let me give some examples below:

Breakfast Bars: with the numerous fast food outlets we have in this country and the nameless Mamaput at every corner of any Nigerian street, I’m surprised that we don’t have breakfast bars that will open at 8a.m and close by 12noon daily to take care of the busy professionals who never have the time to eat in the morning. It won’t be the usual run of the mill fast food outlets, rather food items such as yam and eggs, bacon and toast bread, boiled potatoes and fish or corned beef stew, boiled or roasted plantain and groundnut stew, egg sandwiches and other break fast staples. You could even decide that prospective customers phone in to place their orders while breakfast is served at their various workplaces.

Ewa Agonyin Package Delivery Services: I never thought that Ofada (indigenous rice) would become a hot food staple at major ceremonies and social occasions within the country, but of late this local delicacy keeps popping up at all social ceremonies within the country. Has someone ever thought about delivering Ewa Agonyin to offices and even at parties? Let me know if you have.

Reinventing Boli and Epa (i.e. roasted plantain and groundnut): There’s a woman who sells this delicacy a few meters away from the office. I usually patronise her every other day. I got thinking about the various ways this woman could make more money if she included delivery and attractive packaging to her food staple offer instead of siting down by the roadside, waiting for passersby to patronise her. What if she included groundnut stew? what if she included pepper sauce and a whole lot of other options… would this innovations increase her sales?

Just Like A Wife: We live in an environment where men marry late due to a lot of socio-economic reasons. How about offering to clean bachelor pads, you can even include dry cleaning and cooking services; shop for gifts for the girlfriend, mother, sisters and extended family for a monthly stated sum.

Candle Holders: Due to the epileptic nature of PHCN (Power Holding Company Nigeria), most homes cannot do without candles but this also comes with its’own disadvantage. There have been cases of individuals losing their valuables and properties due to our forgetful nature of leaving the candles on even when we’re through with most of our household chores. So, I thought why do we not have indigenous manufacturers of candle holders. I’m sure there’s a big market for this product.

These are some of the business ideas I can think of right now. If you have any more ideas, please feel free to share your thoughts.

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Why Women Are Getting Wealthier

October 24, 2007 at 9:44 pm · Filed under Financial Independence, Nigeria, Women and Money

Once a week, I’ll be writing a series of article to encourage women who are struggling with their finances and are seeking for simpler ways to save money thereby achieving financial freedom at an earlier age. When I sent this article to a couple of friends seeking their reactions, the answers I got were quite revealing.

70% of my male friends believed that women were wealthier than their male counterparts due to the following reasons:

  • Men are responsible for the welfare of the home, thereby reducing their ability to save regularly.
  • Men have financial responsibilities towards their extended family whereas a woman has none.
  • A man foots the bills and school fees for his children.
  • A man is also expected to splurge occasionally on an expensive item for the spouse.
  • Since our men like to wear the pant at all times, it’s only natual to allow them pick up the tabs.

 However, 30% of my female friends agreed they were wealthier than their husbands or intended spouses. About 15% agreed that they rarely seek financial advice when making important financial decisions while 15% agreed that they needed to be more proactive regarding investments. Now, back to my article…

Gone are the days when all a woman required to be rich was getting hooked to a sugar daddy or aristo. Now the Nigerian girls have fortunes of their own. More Nigerian women are getting richer with 50% having a personal stash of N5mn and above. Recent research conducted indicates a growing number of women have 40% of their liquid assets in stocks, 30% in the money market and 30% in mutual funds and bonds.

The increase in wealth has been attributed to better education for girls, leading to better qualifications, and this has translated to a higher number of women occupying senior managerial posts at the workplace. However, the downside is women are less likely than men to make long term financial plans or take more than a passive interest in their contributory pension scheme. Women are also less likely to plan for the future such as taking more than a cursory interest in the performance of their pension funds, writing a will, setting up a financial plan for the kids. Come on girls think about the future.

Did you like this article? You can drop your comments and suggestions via the “Comment link”. All comments will be published.

 

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Financial Advice for Today’s Youth Corper

October 15, 2007 at 8:06 am · Filed under Getting Started, Nigeria

While reading the papers today, I stumbled upon a quote credited to the Executive Vice Chairman, Nigerian Communications Commission, Mr. Ernest Ndukwe who said “I am convinced that the high rate of unemployment in the country today can easily be halved within a few years if we get our electric power situation resolved”. I could not agree with him more.  Gone are the days where upon completion of youth service, a graduate is assured of an instant job with major organizations within the country.

Nowadays, you’re not even sure of getting a job after graduation, what with the manufacturing industry in comatose. An old colleague of mine who has crossed over to a major telecommunications firm, used to lament on how he stayed at home for six years before getting his first job. With the benefit of hindsight now, I see how shortsighted I was some few years back upon graduating from university. If I had known what I now know, I’d have taken up the entrepreneurship challenge a long time ago. Not that I blame myself entirely, but the system in place encouraged such a dependent attitude on a system that was not creating jobs, but eliminating the few ones that were available.

So, if you’re one of the corpers serving our motherland this month, take note of the following tips:

Identify and Observe: Use your time at the orientation camp to think about what you want to do with your life once orientation is over. Don’t wait for the supposed manna from heaven cos let’s face it, we’re highly intelligent people. Identify your interests, hobby, passion and see if you can sell these attributes for money. Sometimes, your idea need not necessarily be a new one. You can “copy and paste with pride”. Take out the time to observe your immediate environment, which includes your family, friends, neighbors and the social community within your circle of influence. Are there services, needs or wants that are not being met? Are you in a position to offer these services for a stated sum of money?

Start saving: don’t wait till you get that prestigious job after orientation, lay out a savings goal or life plan for yourself and start as soon as you’re paid your first allowance. Don’t join the bandwagon of peer pressure. Commit to a constant and consistent savings plan for the rainy days.

Live below your means: this is not the time to splurge on Tiffany & Ambers, Odua Creations, Jimmy Choo, Mulberry, Curtis and Hawes, Pierre Cardin and other designer items just to announce your arrival on the pre-employment scene. You may think the sum you’re receiving from the Federal Government may not be enough, but if you’re consistent, you’ll be the one laughing last. You don’t need expensive items to substantiate your personal appearance; neatness, basic personal hygiene and a good dose of self-confidence will keep you looking good.

Career Plans: if you decide to contribute your quota to the labour market, identify where your interest really lie. If you read engineering in school to please your parents but your heart lies in the confectionery sector, don’t hesitate to follow your heart. Most times, your instinct is never wrong cos your passion will never fail you. Search for organizations that will give you the kind of experience you need to pursue your own interests later in life.

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This Week

October 9, 2007 at 7:56 am · Filed under Getting Started, Nigeria

Dear Readers, I’ll be away for a week on a business trip and won’t have access to the internet. I will not be able to post any articles this week. For your delight while I’m away, enjoy this great article from Bubbles, where she speaks about how we’re often mistaken for one tribe or the other. If you’re thinking of joining the world of bloggers, you may decide to read the following tips and advice from Trent.

In our bid to start blogging, we need to consider how much information we’ll be divulging online. So you may consider reading this great article by Matt at one million dollar and beyond. Have a great week.

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Assessing my goals for September

October 3, 2007 at 3:17 pm · Filed under Financial Independence, Investing, Retirement Planning, Savings, Stock Portfolio, Women and Money

Last month, I did not give an update of my expenses and savings goal for the month. It was a rather busy month for me which included a lot of travelling for business meetings and other official functions. This month, I really won’t be dwelling a lot on my total networth. Rather, i’ll be giving an update on how effective I was in tracking my daily expenses and monthly savings. August was a bit flat for me especially in terms of my investments on the stock market due to the prolonged bearish run, there were a few dips here and there but overall, I held on steady. Remember, my investment goals are long-term not short-term.

For the month of September, I increased my savings goals from $1,134 to $2,591 due to a recent 40% increase in my annual salary (my organization has decided to include mid-year salary reviews as part of its’efforts in maintaining internal equities amongst employees) also received monthly cooperative check payments to my accounts; invested $2,540 in some public offers and private placements while my pension contribution earned an additional income of $979. To this end, I can begin to focus on my expenses for this month cos while my monthly income has been increased, this has also led to an increase in my monthly contributions towards pension which puts me in relatively healthy financial shape.

So, what are my goals for October? Reviewing my savings goal for the year which was a million naira, I’ve been able to save a bit more than a million naira by pruning down on my daily expenses. Right now, I’m saving towards my next vacation coming up February 2008 (I don’t have a specific destination in mind right now) but I’m working on it. I need a break to enjoy and spoil myself a little while seeing some wonderful sights around the world.

This month, i’ll be tracking my expenses a bit more closely by recording whatever I buy in my little notebook and also keeping all receipts so as to know where my money is going. Last month, I got off on a good start by tracking my expenses and keeping tabs on receipts but somewhere down the line, I lost track of all the receipts and couldn’t even locate some because Iwas not recording it in my notebook. Due to the recent salary increase, I also intend to increase my monthly savings goal from 70% to 80%.

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Are You Monitoring Your Pension Account?

October 2, 2007 at 1:30 pm · Filed under Nigeria, PFAs, Retirement Planning

Since the Pension Act 2004, many workers are still at a loss about their future, especially in relation to pension. Pension is a steady income given to a peron, usuallly after retirement or the payments a person recieves upon retirment, usually under pre-determined legal terms. In the past, many pensioners died without receiving their pension, and others gave up completely onit because of the stress they had to go through waiting to collect the sum accruable. More often than not, the pensions were never paid, because it was a defined benefit scheme, solely borne by one part – the emloyer.

The new scheme, which is a defined contribution plan, provides for an individual account for each participant, and for benefits based solely on the amount contributed to the acount, plus or minus income gains, expenses and losses allocated to the account. Contributions are paid into an individual account for each member. Because of the shared responsibility, defined contribution plans have become more widespread all over the world in recent years, and are now the dominant form of plan in many countries. But in spite of the benefits, many workers are still not yet sure whether their future is secured under the new contriutory pension scheme.

One of the ways to ensure this right is for workers to demand a quarterly statement of their accounts. When I decided to pitch my retirement fund with Pensions Alliance, I made it mandatory that my statemtents were to be sent in as at when due. For the first six months, they sent in timely updates but after these probationary period, I stopped receiving any updates. One of the few things I did was to call up the customer service line and ask to speak with their manager because in situations like this, you need to speak with the decisio maker and not the person who carries out the decisions. I spoke with her and explained how wrong it was for an organization like thiers not to send in timely reports to its’clients, upon which she apologised and said they had actually been sending it to my organizations headoffice but I was not receiving it. To resolve this dilemma, I wrote a letter via email asking the organization to send my pension statement account to my email box. Since then I’ve been reciving timely updates and have a good grasp of the income my fund is generating.

The quarterly account should indicate the profits made during the period, through investment with your money. Contributors must demand for a quarterly statements of their pension accounts from the PFAs cos let’s face it, if you can ask for your bank statements, you can do the same with your monthly pension contributions.

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