High-risk does not necessarily translate into high returns always

September 11, 2020

If in the past, you have been successful with any investment product, you would not mind taking a further risk in the future as well. But if you have encountered unpleasant experiences with any investment, this would lead you to stay away from it.

When investing, while most of us endeavour to earn good returns, we should not just look at the returns but the risk as well. Keep in mind, high-risk does not necessarily translate into high returns always. As a prudent investor, adding investment avenues that are in congruence with your risk profile should not be disregarded.

So, how to go about determining your risk profile? Well, it is a function of your risk tolerance and risk appetite.

Risk tolerance is the ability to take the risk, which depends on the following factors:

Income: If you are earning well, receiving bonuses, increments and career prospects look bright you may not mind taking higher risks. Conversely, if earning an income has been a challenge and income is not growing enough, such setbacks may reduce your risk tolerance. So, broadly the income you earn has a positive correlation with your risk-taking ability.

Expenses: Your outgos influence the risk you can afford to take while investing. You may have a high income, but if your disposable income is low, it will discourage you from making a high-risk investment. So, if you streamline unnecessary expenses, it will leave you with a sizable investible surplus.

Financial responsibilities: The number of dependents and the financial goals you are addressing such as children’s education, their wedding expenses, your retirement, etc., also influences your risk tolerance level. Higher the amount of responsibilities to shoulder, lower is your risk tolerance

Time-to- goal: This refers to how close you are before the envisioned financial goals befall—days, months or years. If you are sufficiently away in terms of years (over three years) from meeting your financial goal, you may afford to take exposure to risky asset classes. On the other hand, if the financial goal is closer (less than 2-3 years away), the risk tolerance may reduce and then exposure to high-risk assets is not suggested.

Contingency reserves: This refers to the rainy-day fund you have built to address exigencies. If a sufficient amount is held as contingency (ideally 24 months of regular monthly expenses, including EMIs on loans), that may allow you to take more risk. But if it is inadequate, that would have a bearing on your risk tolerance.

Insurance cover: Inadequate life cover would lower your risk tolerance. Besides, optimal life insurance cover is essential to provide financial security to your dependents in case of any untoward event. Likewise, optimal health insurance cover is necessary to avoid utilising your savings and investments, in case of a medical emergency.

Risk Appetite

Speaking of risk appetite, it refers to your personal willingness to take the risk as per your age, past experience, and knowledge.

Age: At a younger age, usually the risk appetite is high. However, as age progresses and there are responsibilities to shoulder, risk appetite may reduce.

Past experience: If in the past, you have been successful with any investment product, you would not mind taking a further risk in the future as well. But if you have encountered unpleasant experiences with any investment, this would lead you to stay away from it.

Knowledge: Knowledge and capability to apply it to make well-informed decisions gives the courage to take a calculated risk. Higher the understanding of financial markets and products, higher the risk appetite.

Maximise your investment returns by mitigating risks. With the help of a financial guardian, craft a strategic asset allocation and diversify your investment portfolio.

By Jimmy Patel

MD & CEO, Quantum Asset Management Company

Culled from Financialexpress

How You Can Start Investing in Real Estate

obbuuz

September 10, 2020

There are different ways you can start investing in real estate, no matter how much capital you have readily available and your level of experience. Real estate has the allure of being considered a tangible asset, and there is the potential for regular income with real estate. Today, we’ll share with you few ways you can get started in real estate investments and add to your diversified investment portfolio.

1. Try Investing in Real Estate Related Companies

There are a number of companies that are involved in real estate activities, e.g., home builders, holding companies, commercial ventures, realty companies, mortgage-related companies, etc. Usually, when investing in these companies, you don’t need very much capital at all. You just need to open a brokerage account after which you can start buying some shares. Some real estate companies also pay dividends, which makes it possible for you to receive regular income on top of the capital appreciation you might like.

2. Your Primary Residence

Owning your own home is a perfectly acceptable way to start your real estate investing career.

3. Rent Out Extra Space in Your Home

If you already own a home you could rent out extra room, the basement, parking space, or the garage to generate extra side income.

4. Consider Buying Rental Properties

Another popular way you can start investing in real estate is through the purchase of rental properties. You can buy a piece of property and then rent it out.

5. Real Estate Investment Trusts (REITs)

Let’s say you don’t have enough capital to buy a property and you don’t want to borrow a large sum of money, you can still get exposure to real estate investing through REITs. REITs are traded on exchanges, like regular stocks. However, they invest most of their assets in real estate, and the income is mostly derived from real estate. You can look out for REITs that are majorly into commercial properties, residential properties, or even investments related to real estate.

6. Real Estate Syndication through Crowdfunding

Another way you can start investing in real estate is through crowdfunding investment. This can be achieved by joining any trusted platform and invest in the available opportunities.

The bottom line is that there are different ways you can benefit from real estate investing. You don’t always have to buy a property in order to add real estate to your diversified portfolio. Always keep this in mind that there’s always risk with any investment including real estate.

Cool Tips on how you can Automate your Frugality

obbuuz

September 9, 2020

Living frugally means making intentional choices with your everyday spending. It means mapping out your financial and life goals and then aligning your spending to help you reach them. However, being Intentional is a key component of frugality. And a good way to start on the path to frugal living is by prioritizing your goals, if you begin living a more frugal lifestyle, you can reach your goals more faster.

Waiting Periods

Most people recommend a 48-hour or 72-hour waiting period, but you can decide on a beneficial length of waiting for you. Give yourself a mandatory waiting period on all non-essential purchases. This waiting period helps you to “cool off” from the desire to buy something you may not really need.

Set Guidelines With Your Partner or Spouse

If you’re married or have a partner you share finances with, get on the same page with them. Practice talking about your budget and your spending expectations of each other.

Direct Deposit

Another great way to automate your frugal ways is to set up an automatic deposit to limit the amount of money you have in checking at any given time.

Always Look For Discounts

Anytime you’re purchasing something, look for frugal alternatives. Whatever you spend money on, don’t just buy the first option you see. Look out for discounts, develop and use your negotiating skills.

Learn to Do-It-Yourself

Generally, do-it-yourself (DIY), this can save you a lot of money. Whenever faced with an expense, take a moment to think about whether you could save money by doing it yourself.

Reduce and Reuse

Frugal living is also environmentally friendly because it teaches you to reduce your use or consumption of items, as well as to use up everything you already have.

Learn to always choose what truly adds value to your life and cut out waste on things that don’t add value.

How you can engage your audience in any online presentation

obbuuz

September 8, 2020

In this pandemic era, you’re more likely to give presentations online than in person, so it’s a great time to brush up on your presentation and adjust them for a virtual setting. Check out the tips below on engaging your audiences online and holding their attention throughout your online presentation.

Keep your camera on

If you want people to pay attention to you when you present online, make sure they can see your face. Virtual presentations often include screen shares and visual aids that block the speaker from view. It helps when you put all the content of your presentation next to you on screen, so you can keep that face-to-face connection with your audience, even when you refer to something visually.

Make eye contact

Make sure you are not too close or too far away from the camera and look into the camera when you’re speaking, so your audience can feel as though you’re speaking to them. Your camera should be at about eye-level to make it feel natural and easy.

Set the scene

Ensure the background of your video is neatly arranged and that there aren’t any distracting pieces.

Use Less text, more images

A great way to make your presentation stand out and keep your audience engaged is by including good images in your presentation. Just by doing this your audience is likely to remember about 65% of the information three days later. If you add text, you might want to slow down and let your audience read it before moving on.

Avoid tech Hiccups

do a test run to make sure everything on your computer is working smoothly and that you’re comfortable with your audio and camera setup. And if you want to avoid any possibility of an on-the-spot technical issues, record your presentation ahead of time and share it with your audience.

Good luck!!

HOW TO ACCESS THE CENTRAL BANK OF NIGERIA (CBN) 250 BILLION NAIRA GAS INTERVENTION FUND

obbuuz

September 7, 2020

Nigeria is richly endowed with both energy resources, such as coal, tar sand, crude oil, petroleum and other derivatives of crude oil, natural gas, and various gas liquids and condensates. To this end, the National Gas Expansion Programme (NGEP) was introduced to make CNG the fuel of choice for transportation and LPG, the fuel of choice for domestic cooking, captive power and small industrial complexes. Therefore, as part of its efforts at stimulating finance to critical sectors of the economy, the Central Bank of Nigeria (CBN) introduces the N250 billion intervention facility to help stimulate investment in the gas value chain.

The Central Bank of Nigeria shall:
i. Provide the funding for the intervention facility;
ii. Release funds to the DMBs and NMFB for disbursement to approved financing requests;
iii. Carry out periodic verification and monitoring of projects financed;
iv. Provide periodic reports to the CBN Management on the performance of the intervention.

v. Ensure compliance with the provisions of the Guidelines; and
vi. Review the Guidelines as may be necessary from time to time.

Credible entities can now have access to the CBN Gas Intervention Fund under the following terms:

For manufacturers, processors, wholesale distributors, the term loan, “Shall be determined based on the activity and shall not exceed N10 billion per obligor, Working capital is maximum of N500m per obligor.”
Approvals must be obtained from the Ministry of Petroleum for Companies to proceed with loan applications
Annual interest rates of 5% will apply for loans successfully approved
Loans must be deployed into gas infrastructural development or working capital (not exceeding 500 million Naira) for gas development
Maximum loan amount is 10 Billion Naira for established gas companies and 50 million Naira for Small and Medium Enterprises
A two year grace period (moratorium) will apply for all loans disbursed.

Beneficiaries shall:
i. Adhere strictly to the terms and conditions of the Facility
ii. Ensure prudent utilisation of facility for the purpose for which it was granted
iii. Keep up-to-date records of the enterprise’s activities under the intervention
iv. Allow access to the project and records by the CBN and PB;
v. Repay the facility in accordance with the approved repayment schedule; and
vi. Comply with the provisions of the Guidelines.

All enquiries and returns should be addressed to:
The Director,
Development Finance Department,
Central Bank of Nigeria, Corporate Headquarters
Central Business District, Abuja.

Click here to read further guidelines…..

Essential Things Banks in Nigeria check Before Granting Personal Loans

obbuuz

September 7, 2020

Personal loans are loans granted to individuals for personal use, which includes home renovation, rent, holidays, emergency medical bills. Many people opt for personal loans because they are usually not secured by collateral. However, before a personal loan can be granted, there are many factors banks put into consideration. Some of which are stated below:

Employment status

In order for you to be considered for a personal loan, you need to have a steady and stable source of income in a reputable organization. The bank has to be sure that you can pay back the loan at the stipulated time. There are also other benefits associated with your employment status when you want to get a loan. Besides, your employment status goes a long way to determine if you would get a loan or not and how much you can receive.

Work experience

Banks also put into consideration the number of years you’ve been working at your organization. Usually, an applicant who has been working for 5 years and more may be considered before an applicant who has been working for less than 5 years.

Credit history

Another key thing banks put into consideration before granting personal loans is your credit history. If you’ve ever defaulted on a loan or have other bad records, it is most likely for you not to get a personal loan.

Relationship with the bank

Generally, most banks consider customers that are in good standing and have been doing business with them for quite some time. When you build a strong relationship with your bank, in the future if you are looking to take a personal loan you will most likely get it.

Repayment period

Banks usually want you to repay in a few months. Although they offer repayment periods as long as 60 months. So if you are thinking of exhausting the whole 60 months, you may want to rethink again.

According to the Central Bank of Nigeria, to be qualified for personal loans, you must have a bank account with the bank you want to borrow from; you must be credible, psychologically fit with a good credit rating and you must be able to pay back the loan.

Good luck!!

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