Market timing

Chapter 6

Some people have made it a habit in timing the market in order to beat the market average. The human mentality plays a big role in market-timing. Fear is the main reason why investors try to time market. Market timing is a situation whereby market speculators buy and sell shares to make profit within the short run. They buy such shares at very low prices and sell them at a very high price. When a bill market starts having bear market tendencies, fear sets in. when such tendencies get pronounce, there is high adrenaline, and such investors sell their shares, never time market now supposing the bull market continues, how do you profit from it.

- Forget Intuition in Investing. Buy with the professionals success in the stock market requires counter-intuitive thinking. People react to happenings in the stock market based on their emotions. They do what they intuitively think is right. People never take advantage of a bull market because they keep investing in bearish markets and get fed up with the thing. It is a well known fact that professionals such as fund managers are active in the stock market in opposite way to the public while the public buy wild over valued shares, the professionals are selling and when the public are selling professionals are buying. Professionals buy at the beginning of a bull market one of the public buy at the end of a bull market is that there are sharp rallies which look like the beginning of a new bull market. However they fall again and continue going down. Such rallies are called “Sucker rallies”. Because of this, people abandon hope in the stock market. Most people who time the market to get in, are always too late. The best investment strategy is to stay in the market at all times.

When stocks fall 10%, it is called a correction whereas a bear market is when stocks fall 28% or more. Corrections atimes result in a bearish market.
One of the worst mistake people make is market timing, because much money is lost in doing so than in being in the bearish market.
The easiest solution to combating bear markets is setting a schedule of buying stocks or mutual funds so that you put in a small amount of money every month or after quarter etc. this will remove you from the traumas of bullish and bearish markets.
If you want to be very successful in your investments, you must be able to view at the entire market vertically by size or market capitalization of horizontally by industry or market sector.
Atimes, some people are seared of investing on other peoples business. They do not trust other people with their money so what they do is they keep their money and continue labouring. Such money is in my own term “inactive” in that it is already expended before it reaches such individual’s (i.e. before they are being paid).
Some people are always too anxious when they are first talked to about investment. Atimes they invest everything they earn without leaving part for their day to day expenditures. Such are the people who are sinking in poverty.
Remember poverty is not being without money, but being without hope. They do not have hope for their future. They fail to understand that by investing, they commit themselves to a risk. Study markets trend wisely before committing to a company’s stock. A company that pays dividend is of no difference with a company that retains its earnings. Companies that are labour intensive should be avoided.
Market timing should not be encouraged but it doesn’t mean when your stocks go far down you shouldn’t reclaim your money. If you are adamant, you could reap high losses. For the market timers who may want to still make money in the stock market, there is a simple rule to follow.

Speculators

I wouldn’t advise you to do what I am about to write. It is senseless, contradictory and irresponsible of you. nevertheless, many great people of old have followed its simple rules and have made a jackpot for themselves. Remember to follow the procedure you feel is suitable for you. to some people it is the safest way to make quick money in the market.

Being very reasonable, atimes you’ve got to out your losses. The secret of making a fortune in your portfolio in the stock market is not being right at all times but to lose a very little anytime you’re wrong. You’ve got to recognize your wrongs and sell immediately without any second thought to cut short your losses. The fact that the price of a stock in your portfolio has dropped a little doesn’t does not make it worth selling off. When a stock goes down below tan percent of its purchase value you’ve got to kiss such goodbye.

Do not be over attracted to your stocks. Stocks like teachers are derived demands, in that they are demanded not because of the satisfaction they bring but because of their services which are directed towards achieving other goals.

Like Napoleon, never hesitate on the battlefield of wealth. I wrote in one of the previous chapters that you never really lose until you sell your stocks. This is true but only in cases where the company in question shows a sign of redress.

Set roles limiting your losses or invested capital. Ten percent should be a good limit to sell stocks. All stocks are risky, irrespective of the fact that they are first tier securities or second tier securities. It is always good to take your losses quickly and your gains slowly. The ten percent should be below the value for which you bought such stocks. Some people are seared to sell because they feel their stocks are good stocks since they are still collecting their dividends. To be very successful in your portfolio management you must face facts and stop rationalizing and hoping. No one emotionally loves losses, but to be very successful you’ve got to get your emotions under control. You must be very disciplined to excel in the stock market. You are the another of your finances, never lose courage to take decisions with regards to your finances. It takes real hardwork to become very knowledgeable at stock selection, for folio management and taking right decisions regarding your finances . Never try arguing with the market and don.t let your emotions attach you psychologically to stocks even when they are failing in their responsibility of making more gains.
The aim of every portfolio is to show net profits. Atimes, when you are tired of managing a particular stock you’ve got to sell it and claim your profits. Your major objective is to buy the best stock with the best earning at the right time .Never buy stocks on tips and rumours. Most of this so called tips are originated from outsiders (people outside the stock market )whom have never got an experience in the stock market.

INITIAL PUBLIC OFFERS (IPOS)

An initial public offering is a company’s first offering of stock to the public. The Internet and discount brokerages has made easier, more accessible and a lot more convenient IPOs to individual investors. Acquiring IPO is acquiring a non liquid stock. This is very risky as you may not be able to sell your shares when you really want to: The best time to purchase an IPO is after it has had its foremost correction. If an IPO has been trading in the market for two or more months, you have a valuable data on which to ascertain the situation surrounding such stocks.

CONVERTIBLE BONDS.

A convertible bond is type of bond which can be exchanged for another category of investment such as common stocks, at a predetermined price. Convertible bond provides a little higher income than the common stock to the owner with some of the profits often associated with common stocks.

Convertible bonds are advantageous in that investors in them can borrow heavily and obtain more buying power. Nevertheless, this is also a risk because excessive leverage is dangerous.

INCOME STOCKS

These are stocks that produce high and regular dividend yields, providing taxable income for such who owns it.

If you wish to opt out with income stocks, don’t go for those with the highest dividends, doing contrary will entail entrusting your capital to greater losses. Do not rely on the dividend received from your investments, because a times companies do cot their dividends receivable on shares if they have a reduced earning per share. For the best income program on your stocks, withdrawing a little percentage of your investment each year could pay off for your living expenses.

MERGER CANDIDATES

Companies that are about to merge should be shyed away from. Rumours triggers a sudden rise in price for stocks of such companies. Whenever such deals are not successful, they is a very steep decline in price of such stocks of such companies. It is a very risky venture for one to take. Such should be left to the professionals.

FOREIGN STOCKS

To invest in foreign stocks, a potential investor must knowledgeable in the general market of the particular country He must be conversant with the interest rates, currency, government policy etc. foreign stocks should be left to professionals who are specialized in such fields. If an individual wants to take the chance, I think it will be best for him to have a financial advisor from such countries;

OVER THE COUNTER MARKET

This is a market outside the stock exchange like the Nasdag is to the United States of America. It has no reserved centralized location where traders and professionals gather. The market is often termed “off board” or “unlisted” at which buyers and sellers are not physically present. The market is characterized by direct negotiation between the parties involved (buyers and sellers). Dealers/Brokers negotiate most transactions by telephone or computer networks. In the USA, investment such as bonds do not trade on organized exchange; hence bonds are traded over the counter. A party interested in bonds calls the banks that make bonds and request for quotes. Over the counter market involves bilateral negotiation between counter parties usually carried out via telephone or internet networks. Over the counter market unlike listed stocks (that) the law expects to make public their accounts on a quarterly basis) does not oblige their companies to publish their accounts on a quarterly basis. Nevertheless, OTC are not less profitable than their counterparts that are listed. OTC stocks are advantageous over the listed stocks in that auxiliary costs such as the Nigerian Stock Exchange (NSE) fees securities and exchange commission (SEC) fees, CSCS fees etc are always passed. OTC on the otherhand has its own disadvantages. Prices of quoted stocks are visible in that they are always published in the daily papers while the unquoted stocks are susceptible to the risk of either being overpriced or underpriced. The market forces (forces of demand and supply) may not apply strictly because, not marry may even know they can trade the stocks they are carrying because only limited opportunity exist for trading. Another risk factor is pricing of such stocks which a times may not be right. Price determination depends on bargaining powers. There is usually a delay to locate suitable parties that are even interested in investing in such stocks. The selection of an OTC stock follows the same criteria as that of quoted companies.

- the accounts must be scrutinized carefully, sectional/industrial analysis vis a vis the national economy needs to be evaluated alongside the structure of the company. Future prospects of such companies are very important also after scrutinizing carefully all these then you can arrive at a decision either to invest or not. Since these stocks have no central trading place, the trader (buyer/seller) has to make the effort to locate a dealer/broker of such stocks Also, the OTC stocks to be bought will depend on the recommendation of your broker who would have carried out the necessary analysis of such stocks. Let us look at an example of a company trading in this friesland foods Wamco Nigeria Plc, consolidated Breweries Plc, Ecobank Plc, Eco-Transnational Incorporation. Friesland foods Wamco Plc is the market leader in this venture more often than not, returns on investment of OTC stocks are higher that those of their counterparts which are quoted.

Why should you invest in portfolio?
Everyone has got financial needs which must one way or the other be met. Some of us want to be very rich while others want financial security. To achieve there, it takes time with great discipline. A major step now is the key to your financial security tomorrow.
- Set your investment goals
Be sure of what you really want to accomplish. Your goals must be specific and measurable. Your investment goals are always time oriented and should be classified as short term (0-3 years) medium term (4 – 6years) or long term (above 6 years).
- Live within your means
After setting your goals, you should begin firstly by balancing your budget and live within your income. Avoid accumulation of debts. Avoid credit cards, they’re a major source of debts. After purchasing items via credit cards, you pay monthly installments which often comes with interest charges and this reduces drastically our future income stop all credit purchases except in emergencies. This is always a very tortuous period in a person’s life but it is worth the sacrifice in order to reach your goals.
- Have Adequate Insurance cover you need essential insurance such as life, health, home, motor etc before you start investing.
- Start an emergency Fund
An emergency fund is the amount of money you can obtain quickly to meet immediate needs. This should be in a savings account or a mutual fund. You emergency funds should be able to sustain you even when you lose your job until you can get another.
- Find the money you need to start maybe you need to work to gather this money to start your investment program. This is normally by saving from your monthly pay, lump sum payments, obtaining cheap loans e.g. from your employers, etc.
- Set your priorities
You need decide how earnest want you want your investment goals. If you want is earnestly, you will be willing to sacrifice some expenses to finance it.
No one can make you save money to invest. You have to cultivate the discipline to do it. To get the money to invest, firstly you must pay yourself at least a tenth of your monthly income. Elective saving programs is another advantageous was of getting the money – arrange with your bank and broker or a mutual fund to take a fixed sum of money automatically from your account every month and invest it.

The sooner you start up your investment, the higher your eventual fund growth because of the time valve of money and the effect of compounding returns.

HANDLING YOUR PORTFOLIO

Chapter 5



Handling your portfolio yourself is a lot more work then mutual funding. You may not triple your money in a stock very often but you need a few triples to make a fortune. Before you get started in portfolio management, ensure that you have details of what you want to achieve for yourself. So many people just jump into investments without any idea on the subject matter they are handling. Before they know what is happening to them, they have lost loads of money. It’s very disastrous to put yourself into portfolio management without knowing the subject, it is better to always educate yourself first before you take any risk on your cash. Before going in to play the real game, experiment with imaginary portfolios, so that when the money comes in you will not be engaged in what you are not acquainted with. Your imaginary portfolio may a company’s profit after tax (PAT). This is because, supposing the company issued additional shares or some convertible debenture stocks have changed into equity, resulting in increase in shares, you dividend per share would decrease. Some people buy shares from tips from people. When people tell them that a particular share is on the rise. This is acting on what I call outsides report. Others act based on information gotten from experts who appear on television or are quoted in the journals. Carrying out your own research is best suited for portfolio management. You choose a company based on your own analysis. The more you take interest in studying companies, the less you depend on opinion. You can firmly decide on your own what stocks to have in your portfolio. You can specialize in your portfolio. You can specialize in a certain industry, small or large companies, new or old ones. No matter how much you know about a company, you can never know its future. Your task is to guess what tomorrow would be like from your analysis. The major reason people do not invest is because they feel they’ve not got the money. But we’ll return to this in subsequent pages. Now let’s look at good companies and bad companies. A bad company is such that I wouldn’t advise any investor to put his hard earned money into. Such companies could be identified via:

- Competition, some companies are locked into a competitive structure, which is difficult to change. A competitor has an edge in terms of market share, brand, technology etc.
- Culture some companies have a particular may of trading that distinct it from others. Bad companies tend to have low efficiency, poor management and as such find it difficult to recruit best tactics in doing business successfully.
- Low liquidity and high gearing: Gearing is a comparison between the long term liabilities of a company to its long term assets. Any business with huge debts profile is certainly not good and I do not think any investor will like to throw away his cash on such companies.
- Poor managerial team: The managerial team makes up the bulk of the company. They support the company. In cases where the managerial team make poor decisions concerning the welfare of the company.
To know a good company, a good business will always produce a high return for the investor. Good companies go about their business in a way that leaves them unnoticed by most investors.
They possess such characteristics as follows:
- High return on capital. This is mostly achievable by the company with the highest market share in any competitive system.
- Stability of profits: Mismanagement may result in occasional dips or it could be a result of economic trends. Before going into be a shareholder of a company, check the stability of profits for the previous financial years.
- Business franchise and high market share. This is building a good brand, physical proximity or emotional appeal to the customers as their first choice irrespective of prices. Such companies include limited African company of Nigeria Plc. (UAC PCC) which has so many franchise around Nigeria hence increasing its scope of trade. If there is high relative market share in its important markets, and if you can define a barrier to entry, it would make a good company to invest in. if you have the available resources for portfolio investment the stock broker is your entrance into the stock markets. You cannot buy or sell shares in the stock exchange without the services of a broker. In doing this, you don’t have to only pick your stocks but you have to analyse all the brokerage houses available before choosing any one. Once you’ve settled in the house, you must have an account.
When you’ve opened the account and signed all necessary papers. You hand over the money for the investment and inform the broker on what company you’re interested in. he will give you a research report concerning such company based on the house analysis. When dealing with a stock brokerage firm, always ensure to take absolute care if not you run into serious trouble.
The stock market has always been a veritable profit making tool attracting many investors in recent times. However, the increased flow of investments and commission doesn’t seem enough, as dubious fraudsters in the industry look for quicker ways to bolster their pockets. Adamu had just received a sum of N10,000,000.00 for his role in the capture of a dangerous criminal. Not long after he received his check, he called his stock broker ordering him to buy 20,000 units of Nestle Food Plc shares at N80.00 per share. After a period of ten months, learning that Nestle Food Plc’s shares have appreciated to N200.00 he calls his broker to find out the worth of his 250,000 units of Nestle Food Plc shares at the current market rate, only to be told that there was an error his shares had been sold.
Basically, securities fraud is a crime that occurs when deception of a material kind occurs in the trading or dealing of stocks, bonds, or any security. Instances abound where some operators have been found wanting in the discharge of their responsibilities which has led to charges and accusations of fraud and deceptive practices being leveled against them. Over the years, several of such cases have been reported to SEC for investigation. Now let us look at one of the biggest stock seam in the history of the Nigeria Stock Market.

THE BONKOLAN’S CASE
In April 2002, it was learnt that a seam had been perpetuated on the floor of the stock exchange involving the illegal sale of Nestle Foods Plc and Unilever Plc shares and certain other securities. The seam was alleged to be perpetuated by a syndicate which worked through certain stock-broking firms. The major firm that was indicted was the Bonkolan’s invested limited. The SEC went into investigation and confirmed the involvement of a number of other stock broking firms and certain individuals consequently, twenty corporate organizations and another twenty individual respondents, were invited before the Administrative proceedings Committee (APC) of SEC to give further explanations of their roles in the alleged seam.

After its investigations, the APC recommended punishments ranging from withdrawal of licenses of such stock broking forms and individuals to the outright ban of firms and individuals from the capital market. Monetary penalties, warning and reprimand of firms, as well as individuals were also meted out to the individual parties. The Nigerian Police Force and Nigerian Stock Exchange also cited some for further investigations.
After the storm had set, about 17 individuals were blacklisted and banned from operating in the capital market. Bonkolans Investment lost its trading license and six other stock broking firms were suspended for a period ranging from 3-6 months. Gossard Securities got an indefinite suspension. Seven stock brokers were suspended for a period ranging from 3-6months. All the suspended operators were required to undergo fresh registration, with an under taking of good conduct as a condition for re-admission.
Furthermore, SEC also ordered the restoration of all affected shareholders in either cash of share, to their original position before the seam-provided that all restorations by shares shall include bonuses and dividends while restoration by cash shall be 2% above CBN MRR. It also stipulated that all payments/restoration shall be made into a designated account to be maintained by the CSCS and Union Bank registers. Seventeen other implicated persons suspected of dubious dealings were referred to the Nigerian Police for further investigations).
This is to imply that showing a lackadaisical attitude towards your portfolio management because you think you have a good broker may leave you vulnerable to being scammed. Here is a few ways the scammers may go about their plots.

- Churning
This is excessive trading by a broker on a customer’s account in order to charge more fees for himself rather than improve the investment strategy of a customer. This is very common. If you notice any form of trading on your portfolio without giving any instruction for such trades to take place, you better do yourself good by reporting such brokers to the Security & Exchange Commission (SEC).
- Fraudulent practices: As share prices tumble, some brokers may decide to take laws into their hands by resorting to outright fraud. Investors should ensure they monitor their portfolios closely even though other people manage them. Follow the companies you’ve invested in closely by reading their financial reports. Keep yourself informed at all times.
- Unlicensed Individuals: Some brokers and brokerage firms also trade securities whenever you want to do business with an independent agent, you’ve got to ensure that the sale person is licensed. You do this by contacting the nearest SEC office and ask if such an individuals is licensed and whether the investment he is trading is registered or a scam. If the answers are yes, the investor should be more comfortable with the product although you can never be too careful.
- Ponzi Scams: These are schemes that offer products and pitches that may sound too tempting to be true. It is a bid to love you into inexisting investment schemes, with a promise of huge returns beyond market rates. There have been repeated calls from the investing public to stock brokerage firms and financial houses to deal decisively with their employees who cheat investors over share transaction.
SEC has also assured investors of the commissions readiness to sanction any operator who is not willing to play by the rules and regulation of the market. There are several ways of protecting yourself against share seam by brokers.
- The Trade Alert: This is a recent computer innovation which is targeted at detecting and frustrating share seam, which was launches of recent by the NSE. This service enables a subscriber to be immediately notified of transaction involving his shares via his mobile phone. The alert will also, as value added services, provide subscribers with notices of market activities, Annual General Meetings, Quarterly Financial highlights of quoted companies, weekly balances and price movements of stocks.
- The Stock Police: The securities and Exchange Commission is primarily responsible for detecting and investigating a variety of potential violations and enforcing compliance with the investments and securities Act. As the apex regulatory institution of the Nigerian Capital Market, it has the responsibility of eradicating security fraud and issuing out required punishment to the fraudsters. SEC is prepared to come down hard on anyone forward breaking the rules of the game. Any broker found guilty would be handed to any of the Economic and Financial Crimes Commission (EFFC) or the Nigerian Police for Prosecution, for the investor, the need to be vigilant cannot and should not be over emphasized and more than ever, discretion must be a key component when making investment decisions. In case you have been defrauded, do not hesitate to report such a person or group of persons to the SEC. It might be too late for you but you might just help someone else from having such an experience remember thieves are not living for stealing goats but that goats may not be stolen.
After you buy your stocks in let’s say Nestle Plc, you rushed to buy the papers the next day to see how your stocks performed that day. Now let’s analyse carefully the headings on the papers before you get yourself confused.



In understanding the stock table,


First column; shows current stock prices for a particular day

Second column; show the previous days stock prices

Third column; show change in stock prices between the current and previous day. A number in bracket represents a fall in price.

Fourth column; shows the percentage change in stock price in a day. If the number is in bracket, it shows a drop in price.

Fifty column; (mark down price); shows the price of a stock after its marked down for cash dividend and /or bonus share issue sixth column; (Today low); shows the lowest price a stock was traded on a particular day seventh column (Today high) shows the highest price a stock was traded on a particular date Eight Column (yr low); shows the lowest price a stock was traded in the last 12 months ninth column yr high); shows the highest price a stock was traded in the last twelve months.

Tenth column year to day (YTD); shows the percentage capital or price gain made by a stock from January to its current price (Figures in brackets represents percentage drop in share price of the stock since the beginning of the year.

Eleventh column (earnings per share) (EPS); stands for what each issued shares of the company earns if the company’s profit after tax is shared among all its issued shares

Twelfth column (P/E Ratio); stands fior price earning ratio. It is the market price of a stock divided by its earnings per share (EPS). It indicates the premium investors are paying for acompany’s earnings, or how long an investor will have to wait to recover their investments in stocks based on current earning

Thirteenth column (F/Yr); shows the month the company closes its financial year. In previous pages, we discussed the difference between a good and bad company. Stocks do not move up linearly but on the contrary they have gone via stretches of decline over time. Now that you know which is bad for you’re got to know the profitability of a good company to you. Here is an easy guide

– Get Acquainted with the company. Buying stocks summarily is taking ownership of part of the company, it is very important to know how a company makes money before investing in it you do this by reading such company’s financial books some companies invest in other spheres of the economy.

– Do a financial checkup. A good defence against unpleasant future events is financial strength. The numbers you need can be found in the cash flow statement which is always included in such company’s financial account.

The key is to focus on cash flow generated from continuous operations. Companies with positive cash flow has money to invest in the business, settle their debts and pay dividend to investors. Moreover, such company does not have to generate capital all the time from the capital markets to fund its growth unless such is absolutely necessary.

Also, the operating income (listed on the income statement) operating income reveals more than the broader net income and excludes one – time gains or losses as well as interest earned from investments and other items that can distort net income. A third place to measure a company’s pulse is on its revenue line. Companies can make profits over the short term by cutting costs or taking – one time gains. Revenue, although not fool-proof, is much tougher to inflate. Also in the long run, the only thing that is going to drive increase in profits is rising sales after determining the revenue trend, check gross profit margin. You can calculate them by dividing gross profit by revenue. Falling margins are often a sign of impending trouble. They cold be because such company is threatened by competition, or demand is slowing or its overheads are too high.

- Know the indebtedness of such company.
Debt is an important tool for companies to achieve certain goals. Wise borrowing could increase earnings. You must look at the debt – to – equity ratio as measure of debt a company holds in contrast with its shareholders equity. Analyze the company’s interest coverage – a number that compares a company’s pretax profits with its interest obligations. Interest coverage is the (pretax profits + interest paid):- the interest paid you have to take absolute care if the ratio is less than five.

- Know the difference between a good company and good stock some people go for stocks that are at their highest prices the best company in the stock market can be your worst investment if you pay too much for its stocks. The stock market is a system that quickly accepts everything known of a company and awards the company stock an appropriate value. Sometimes, there is a system failure-investors may overact to a hit of bad news or are over enthusiastic about a bit of good news but fail to recognize the value of some assets. To know a company with a good stock check the markets capitalization by multiplying the number of shares outstanding by the share price and measure the value the stock market places on the whole company. A much higher outstanding share constitutes a problem given the level of profitability required to service such a large shareholders base. You also have to scrutinise where the shares are coming in from in terms of may be 52-week range. If the stock you are intending to buy has been hitting 52-weeks high, find out why before jumping in.
One of the best ways to know if a stock is trading at a reasonable price is to take a closer look at its P/E (Price/Earning ratio) not the profit after tan because such profits may be used to settle debts. If a company trades at discount to the market, the industry average or its competitors current PE ratio are generally considered under valued and depending on your outlook for the future, could signal a bargain. The company’s historical range could also determine if your stock’s P/E is too high. A stock can be underpriced for several reasons. –Investors may lose confidence in the company’s management or competitors may be eating deep into the firms market shares. These stocks are no bargain and there are quite a few quoted on the Nigerian Stock exchange,
A few things to guide you in knowing the profitability of a company are

- Brand name products
- Increased Earnings per share
- Low debts
- Huge cash flow
- Adjustment of prices with inflation
- Does profitability depend on large capital sums.
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Misconceptions about schools

Many times, people are so over concerned about going to school, making a good result and securing a good job. Even atimes, we despise the uneducated in our society. The idea of making good grades doesn’t secure your future in anyway. The idea of securing your future dwells with people with great ideas. Ideas that can be changed to wealth. Nowadays, companies do not just employ an individual because of his good grades but because of the ideas such individual has to maneovre the company to success. Most people have just a way of making money which is via their jobs. They cherish such jobs because they feel it is a product of their hardwork but what is hardwork?
Hardwork is not really what people think it is i.e. putting your whole time, body and mind to the job you are doing (Dedication to work). Father it is working smartly. Earned income is a form of linear income which comes after each job done. Other forms of incomes are needed to be a wealthy person. Many people do not know this because they are too addicted to what they are being taught at school. Like I said before these skills cannot be taught but can only be learned. The basics in academics is that people find what they’ve been taught to look for. Most students leave school when they are not mature for the society. Maturity not in terms of age but in terms of mental maturity. You’ve got to use your intellectual know – how to get more ways of making money.
Note: I’m not referring to illegal tactics. The other form of money gotten outside what you earn is called residual income. Money is a great worker, once you put it to work, it puts extra cash in your pocket without you having to raise a finger.
Stocks are likely to be the best investment, you’ll ever make outside Real estates. You don’t have to feed pay to maintain stocks because it does not leak like the roofs of houses etc. Buying a stove entails owning a part of the company which is issuing the stock.
Investment is the general term used to describe making money outside your income.
Wealth suit having move money but enjoying more money living a life of complete slavery to the course of wealth generation is complete poverty. Buying stocks is generally a very risky business. When people consistently lose money in stocks, the fault most often than not is always on the part of the investors. They simply do not have a plan. These are people who buy at very high prices, run out of patience and sell at relatively low prices during one of those periods when the values of stocks go down. To invest, you need a plan and most importantly in stocks. You’ve got to play the people and institutions who play in the stock market and not the stock market in order to succeed in stocks. Some people who make up the stock market are motivated by the short term results of a company. People are often pushed to buy stocks because of the headline reports, such people are described as “momentum investors”. The short-term mentality of the stock market sometimes raises or lowers the values of some companies. Others are those who trade in the market. This means buying stocks when the market is on the rise and disposing of them when the market gets sour. The stocks selected are always among those that have behaved above market average. Here a very few persons are involved in this with a vast majority of them being the unskilled investor (in investor that is always very scared of losses in the market). They sell the stocks when their values increase and later buy-back them stock when their value reduces. Majority of the time, stocks they sell do not really belong to them but are borrowed via the activities of the stock exchange. Before we continue, let us define certain terms in association with stocks.

Shares

A shares confers on you part ownership of a company offered for sale to the public. Some companies do not trade their shares and as such are regarded as private companies. While firms that do are regarded as public companies.

Ordinary Stockholders

These are always the last people to be paid after the creditors have been paid.

Preferential Shareholders

These are the first class of shareholders to be paid and their income is fixed.

In investing, you don’t have to be a math genius to be a successful investor in stocks, all you need is a plan. Time is the second most important factor in investments in stocks after you’ve got a plan. Your parents may know more about stocks than you do but they’ve not got the time you’ve got. A small money invested today is worth more in the long run than a huge amount invested later.

Twenty years or more is the right duration for stocks to rebound from the worst market depressions and file up profits for you. Stick with your stocks, ignore the side talks. The secret to being wealthy in shares is buying stocks in good company which have an excellent record of past growth which may be predicted likely to continue on the future or choose companies which have not shown impressive results yet but has a positive forecast. Such are always consumer products companies. Before you embark on investing in any company, make sure you carryout an in depth study of the company before making such purchases. Many people follow experts that make forecast at the stock exchange or their financial advisors which is very wrong. By studying the reactions of people towards certain commodities (market trends), you develop knowledge of the market for such commodities and you can make your own forecasts. Familiarity breeds complacency. The more familiar a stock is to us, the less we carryout proper analysis of the stock.

Nobody can predict exactly when a bear market will arrive and when one does eventually arrives, the prices of most stocks drop in unison, many investors get scared and they worry that their investments may eventually be wiped out. They try to salvage their stocks by putting them up for sale even at magnificent losses. They show a great deal of cowardice letting their emotions take a better part of them without reconsidering what they are doing lose a great deal of money voluntarily. These are the so called market timers, who’d sell stocks because the market is up or down. Nobody can outsmart the market.

To get the best out of stocks, especially for we that are very young and have time on our sides is to invest money you can afford to forget about forever. Leave them in the market through booms and depressious. What the so called “market timers” do not know is that in retaining such shares, you’ll never make a loss.

One very tough decision to some people is picking their own stocks. So for these people, its better leaving the job in the hands of the experts. The only task such people perform is just the funding of such investment. Your money is put together with a lot of other peoples money whom you may not know and is invested by the experts on your behalf. Such is applicable to insurance and the pension scheme. As soon as you sign in with a fund, you instantly become a shareholder in all the companies the fond buys, no matter the amount you invest. A major advantage of investing in mutual fond companies is that it less risky than owning stocks in just one company.

Mutual funds originated from the Netherlands by King William I of the eventually, the idea has spread to over sixty countries.

The best experts cannot redeem you during bull markets.

Picking you own stocks could be fun so far as you have the discipline. It is much more load than investing in mutual funds, where you leave the experts to invest on your behalf. Here; you pick your own stocks and you fund such stocks. Some people invest in mutual funds and at the same time, pick their own stocks. Some mutual funds provide the benefits of having some one else manage your investments, keep your account records and diversify your investments over many securities that may not be available or affordable to you otherwise. One major advantage of the fund is enjoying economics of scale. Dealing cost is lower than for those trading individual shares themselves. Because of the dynamics of financial markets you do not need to worry about the timing of adjustments to your portfolio.

Secondly, you are exposed to a wide range of investments and so you are not vulnerable to the risks of holding a handful of individual shares. It encourages diversification which is a good investment strategy. Diversification of your stocks investment across a wide range of companies reduces the risk of the failure of one company or sector.

Mutual funds are affordable. They accommodate investors who do not have a lot of money to invest by setting relatively low Naira amounts for initial purchases subsequent purchases or both. Mutual funds provide liquidity, investors can readily redeem their shares at any time.

The first mutual fund was registered by the securities and exchange commission (SEC) in 1991. now with about 20 registered funds, investors have since invested about N20billion. Although this does not stand a per with the $6million invested in mutual funds in America.

Now let’s look at why mutual funds are not thriving in Nigeria as compared to developed markets. They face a lot of challenges in the market which they operate. Firstly, a vast majority of Nigerians are low income earners. Their income is barely enough to cover all their primary needs let alone to be invested. In addition, the high level of illiteracy in the country effectively cuts out a substantial part of the population who otherwise may have invested in mutual funds if they had the level of literacy required to be informed on such issued.

A lot of work needs to be put into the education of the public (public awareness) on mutual funds, how they operate and the benefits of investing in them. Given the fact that the Nigerian financial market is essentially still at the developing there are very scarce options made available to the investor and are not as diversed and varied as is obvious in other countries. What makes a good investment is absolutely subjective and depends on the rationale of the investment, that is the plan of the investor whether long term or short term in terms of the period of investment and also whether the intention of such investor towards the fund is for capital appreciation, provide a steady income stream or a hybrid of these factors. Moat importantly is that maximum value is gotten from investment while simultaneously ensuring minimal risks. You can buy mutual funds directly from the companies that manage them. You can also go through a broke, but be sure to investigate the fund properly long-term investors should ignore all bond funds and those funds that invest in a combination of stocks and bonds. Go through past records of funds before investing in any of them. Also look at the managerial team, and ensure that the fund you invest in has the right managerial team to give you what you want. Some of the funds that have solid past records do not still have the managerial team that took it to that height. Invest in funds that have sailed through the good and bad time.

Now another difficult problem is what types of funds to choose from. Because mutual funds have specific investment objectives such as growth of capital, safety of principal, income and hedging of against depreciation in Naira, you can select one fund or any number of different funds to help you meet your specific goals. Mutual funds fall into the following groups:

- Equity funds: These funds invest in shares of common stocks.
- International funds: Seek resources to invest outside Nigeria. These funds provide investors ample opportunities to avoid putting all their eggs in one basket. Some investors are unfamiliar with foreign investment policies and currencies and may not have a dear understanding of how economic or political events affect foreign securities. An investor in international fund doesn’t have to worry about trading practices, record keeping time zones or the laws and customs of foreign countries because the fund handles all of them.
- Fixed income funds: Are funds that invest primarily in corporate or government bonds and stocks that have a fixed rate of return. Their objective is to provide a high current income consistent with the preservation of capital. Capital growth is of secondary importance. This type of funds are suitable investors who want to maximize income and who can assume a degree of capital risk in order to achieve this.
- Money market funds: Provide stability of capital while seeking a moderate to high current income. Their investment is very liquid, short-term debt securities and have no potential for capital appreciation. Such funds are suitable for investors who want high stability of principal and moderate current income with immediate liquidity (easily redeemable).
- Sector funds: Invest in securities of a specific sector of the economy such as oil and gas, banking etc. they do not offer the sort of risk protection found in funds that invest in a broad range of industries. Although, there is always diversification among several companies via within their sector of operation which is still better than investing in just one company. Sector funds offers, sharp capital gains in cases where the funds sector is in favour but also offers the risk of capital losses when such sectors are out of favour.
Before you go into mutual funding you’ve got to have a plan. Here is a list to guide you.
- Instead of starting your evaluation of a fund with its performance, think about your investment goals-whether you are looking for a current income or an investment for a short-term, then a bond is good for you. If you have a longer-term goal, you might consider an equity fund. If you want appreciation of capital, you need a fond that; invests most, if not all of its assets in stocks. Stock prices fluctuate everyday, so funds that invest in stocks will also fluctuate in value daily.
If what you want is a stream of income, you’ll need funds that invests in debt securities such as bonds. Like stocks, bonds experience fluctuating share prices, although of a lesser degree. If you want to preserve your capital, you will need a money market fund, which maintains a stable share price while providing some income. In return for this stability you have to make do with less income than if you invested, in a bond fund. To seek a bit more income, without sacrificing too much stability of principal, you could choose a short term bond fond. This experiences modest price fluctuations but with higher yields than money market funds.
- Ensure that you are satisfied with the level of management and you are okay with business strategy of the company. Make sure that the company frankly discusses the potential limitations if not you’re getting into a very deep mess. Ensure that the company sticks to what is outlined in its prospectus if not you may be going contrary to your plans. The cost is another major point of concern, there are some funds who marge a lot before you can become a shareholder and this may not be good. Follow the managers records and be sure the company suits your plan.
- Be acquainted with the various prices of funds you wish to invest in every fund has and expense ratio money deducted from its earnings and assets to pay annual operating expenses. The lower the expense ratio, the more the returns the shareholders are certainly going to receive from such funds. Go for funds with high turnover ratios.
- Once you have chosen a fund type, the next step is to evaluate the funds in such category. Read the company’s prospectus carefully. To find out how well a funds performance as been, you have to compare it to its rival funds in the fund type you have chosen.
The bench mark index is also very important, compare the fund to the NSE index to be certain of its creditability.
- Are your interests protected? Excessive trading by just a few of a fund’s shareholders can disrupt operations and boost expenses that all shareholders have to absorb. If you’re a long-term investor, look for policies that protect your interests. Some fund companies limit the number of transactions investors can make within a given period. Some funds hold down trading shares before they’ve been held for a specified period of time. This type of fee which may range between 0.25% to 2% is not a sale fee, because it is paid directly to the fund and not the fund company to offset the costs incurred by the redemption activity. Check the record keeping services of the companies. Some people take record keeping unseriously until they buy funds from bad fund companies. Fund companies offer statements of accounts, and other services that make record keeping convenient for fund holders. Example; before you invest in a taxable account, make sure the fund keeps track of the cost basis of your shares over time. If not, you’ll have a problem keeping records when you decide to redeem your shares.
To know if your funds are doing well, at the end of each financials day, the fund manager calculates the value of the various holdings of the fund. The liabilities of the fund are then deducted from this value. The result of this is called the Net asset value (NAV). Dividing this value by the number of shares in the fund amounts to the Net Asset Value per share which is the price of a single share for that day.
If the company is doing a good job, the NAV per share increases in value and if conversely, if the company has a poor managerial team, the NAV per share reduces in value per day. In the fund investment, you can earn money via.
- Dividend payment: This includes the dividends and interest on the securities the company invests in. the fund pays its share holders nearly all the income except some minor expenses that would be made mention to the shareholders.
- Capital gains distribution: The price of the securities a fund owns may increase. When such securities are sold, the fund makes a capital gain. At the end of the year, most funds distribute such capital gains to investors.
- Increased Net Asset Value (NAV): If the market value of a fund’s portfolio increases, after deductions of expenses and liabilities, then the NAV of the fund and its shares increases. The higher NAV reflects the higher value of investment.
When you invest in a fund, and the expected result is not made manifested, there is no need holding on to such funds. Let us look at good reasons why you should dump a fund.
- Your fund is a persistent loser: The mere fact that a fund has how returns or even losses shouldn’t prompt you to sell. If there is a bear market, you cannot expect your fund manager to turn to Christ. But if this happens for two to three years, by a substantial margin, start thinking of another fund.
- The fund’s investment strategy has changed: If you want a diversified portfolio, then you’ll probably pick up equity funds. Supposing the equity fund managers strays from their area of concern, they’ve not only strayed, but they are leading you astray from your plans. There is no need having a second thought here unless you are willing to also change your plan.
- Change in managerial team of there’s a new manager for the fudn, he may not abide by the same rules, his predecessor abode by. Ensure that he does not down turn your funds to make losses otherwise you quickly pack from such funds.
- The fund managers are not straight forward: Some of the professional fund managers are often not knowledgeable in fund handling and as such make sure you are satisfied with the managers in change at present.
http://www.bbpmarketing.com/mydlc.html?26595

808

Webmasters: Getting To The Top Of Google (And other Search Engines) Just Got Easier
James Martell, The Undisputed Natural Search Expert, Shows Students How To Climb The Elusive Search Engine Ladder, Becoming More Visible To Target Audiences And Increasing Revenues

Webmasters from every corner of the worldwide web are learning how to catapult their sites to the top of Google and other search engines, applying the latest techniques used by natural search expert James Martell and detailed in his "2006" Affiliate Marketer’s Handbook (THIRD EDITION).

A true compass for navigating any website to new heights of online success, Martell’s handbook is accomplishing what no other like handbook or guide has been able to do.

This “refreshed” edition dives headfirst into the sea of changes that have recently taken place at Google and other search engines and provides the most up-to-date information needed to ensure Webmasters can guide their websites to the top - and keep them there.

As the natural search expert, Martell has created quite a following – both online and off. His commitment to providing downloadable home study guides that leave no stone unturned sets him apart from other successful affiliate marketers and speaks to sell-out crowds at industry events and at his popular Affiliate Marketers BootCamp (http://www.affiliate-marketers-bootcamp.com/).

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As a Webmaster in the know, you undoubtedly realize how rare "third edition" e-books are. And, you probably already know that Martell is uniquely committed to his student’s success and since the release of his first edition, has provided free updates with every search engine change to students through an “Updates” page on his website.

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For more information, visit; http://www.work-at-home-net-guides.com/.

About the Author

Kellie Fowler is an award-winning freelance writer who spends her winters in the U.S. and her summers in Canada, where she enjoys her 6 rescue pets, kayaking, fly-fishing, reading and writing about successful home based business opportunities. She is the owner of Write Solutions, a full-service writing company. Kellie currently freelances for several international groups and Fortune 500 companies, as well as well-known national magazines and newspapers.

Your Finances: Small vs big(cont)

Small vs big (Pt 4)

Chapter 4

Many times, people are so over concerned about going to school, making a good result and securing a good job. Even atimes, we despise the uneducated in our society. The idea of making good grades doesn’t secure your future in anyway. The idea of securing your future dwells with people with great ideas. Ideas that can be changed to wealth. Nowadays, companies do not just employ an individual because of his good grades but because of the ideas such individual has to maneovre the company to success. Most people have just a way of making money which is via their jobs. They cherish such jobs because they feel it is a product of their hardwork but what is hardwork?
Hardwork is not really what people think it is i.e. putting your whole time, body and mind to the job you are doing (Dedication to work). Father it is working smartly. Earned income is a form of linear income which comes after each job done. Other forms of incomes are needed to be a wealthy person. Many people do not know this because they are too addicted to what they are being taught at school. Like I said before these skills cannot be taught but can only be learned. The basics in academics is that people find what they’ve been taught to look for. Most students leave school when they are not mature for the society. Maturity not in terms of age but in terms of mental maturity. You’ve got to use your intellectual know – how to get more ways of making money.
Note: I’m not referring to illegal tactics. The other form of money gotten outside what you earn is called residual income. Money is a great worker, once you put it to work, it puts extra cash in your pocket without you having to raise a finger.
Stocks are likely to be the best investment, you’ll ever make outside Real estates. You don’t have to feed pay to maintain stocks because it does not leak like the roofs of houses etc. Buying a stove entails owning a part of the company which is issuing the stock.
Investment is the general term used to describe making money outside your income.
Wealth suit having move money but enjoying more money living a life of complete slavery to the course of wealth generation is complete poverty. Buying stocks is generally a very risky business. When people consistently lose money in stocks, the fault most often than not is always on the part of the investors. They simply do not have a plan. These are people who buy at very high prices, run out of patience and sell at relatively low prices during one of those periods when the values of stocks go down. To invest, you need a plan and most importantly in stocks. You’ve got to play the people and institutions who play in the stock market and not the stock market in order to succeed in stocks. Some people who make up the stock market are motivated by the short term results of a company. People are often pushed to buy stocks because of the headline reports, such people are described as “momentum investors”. The short-term mentality of the stock market sometimes raises or lowers the values of some companies. Others are those who trade in the market. This means buying stocks when the market is on the rise and disposing of them when the market gets sour. The stocks selected are always among those that have behaved above market average. Here a very few persons are involved in this with a vast majority of them being the unskilled investor (in investor that is always very scared of losses in the market). They sell the stocks when their values increase and later buy-back them stock when their value reduces. Majority of the time, stocks they sell do not really belong to them but are borrowed via the activities of the stock exchange. Before we continue, let us define certain terms in association with stocks.

Shares

A share confers on you part ownership of a company offered for sale to the public. Some companies do not trade their shares and as such are regarded as private companies. While firms that do are regarded as public companies.

Ordinary Stockholders

These are always the last people to be paid after the creditors have been paid.

Preferential Shareholders

These are the first class of shareholders to be paid and their income is fixed.

In investing, you don’t have to be a math genius to be a successful investor in stocks, all you need is a plan. Time is the second most important factor in investments in stocks after you’ve got a plan. Your parents may know more about stocks than you do but they’ve not got the time you’ve got. A small money invested today is worth more in the long run than a huge amount invested later.

Twenty years or more is the right duration for stocks to rebound from the worst market depressions and file up profits for you. Stick with your stocks, ignore the side talks. The secret to being wealthy in shares is buying stocks in good company which have an excellent record of past growth which may be predicted likely to continue on the future or choose companies which have not shown impressive results yet but has a positive forecast. Such are always consumer products companies. Before you embark on investing in any company, make sure you carryout an in depth study of the company before making such purchases. Many people follow experts that make forecast at the stock exchange or their financial advisors which is very wrong. By studying the reactions of people towards certain commodities (market trends), you develop knowledge of the market for such commodities and you can make your own forecasts. Familiarity breeds complacency. The more familiar a stock is to us, the less we carryout proper analysis of the stock.

Nobody can predict exactly when a bear market will arrive and when one does eventually arrives, the prices of most stocks drop in unison, many investors get scared and they worry that their investments may eventually be wiped out. They try to salvage their stocks by putting them up for sale even at magnificent losses. They show a great deal of cowardice letting their emotions take a better part of them without reconsidering what they are doing lose a great deal of money voluntarily. These are the so called market timers, who’d sell stocks because the market is up or down. Nobody can outsmart the market.

To get the best out of stocks, especially for we that are very young and have time on our sides is to invest money you can afford to forget about forever. Leave them in the market through booms and depressious. What the so called “market timers” do not know is that in retaining such shares, you’ll never make a loss.

One very tough decision to some people is picking their own stocks. So for these people, its better leaving the job in the hands of the experts. The only task such people perform is just the funding of such investment. Your money is put together with a lot of other peoples money whom you may not know and is invested by the experts on your behalf. Such is applicable to insurance and the pension scheme. As soon as you sign in with a fund, you instantly become a shareholder in all the companies the fond buys, no matter the amount you invest. A major advantage of investing in mutual fond companies is that it less risky than owning stocks in just one company.

Mutual funds originated from the Netherlands by King William I of the eventually, the idea has spread to over sixty countries.

The best experts cannot redeem you during bull markets.

Picking you own stocks could be fun so far as you have the discipline. It is much more load than investing in mutual funds, where you leave the experts to invest on your behalf. Here; you pick your own stocks and you fund such stocks. Some people invest in mutual funds and at the same time, pick their own stocks. Some mutual funds provide the benefits of having some one else manage your investments, keep your account records and diversify your investments over many securities that may not be available or affordable to you otherwise. One major advantage of the fund is enjoying economics of scale. Dealing cost is lower than for those trading individual shares themselves. Because of the dynamics of financial markets you do not need to worry about the timing of adjustments to your portfolio.

Secondly, you are exposed to a wide range of investments and so you are not vulnerable to the risks of holding a handful of individual shares. It encourages diversification which is a good investment strategy. Diversification of your stocks investment across a wide range of companies reduces the risk of the failure of one company or sector.

Mutual funds are affordable. They accommodate investors who do not have a lot of money to invest by setting relatively low Naira amounts for initial purchases subsequent purchases or both. Mutual funds provide liquidity, investors can readily redeem their shares at any time.

The first mutual fund was registered by the securities and exchange commission (SEC) in 1991. now with about 20 registered funds, investors have since invested about N20billion. Although this does not stand a per with the $6million invested in mutual funds in America.

Now let’s look at why mutual funds are not thriving in Nigeria as compared to developed markets. They face a lot of challenges in the market which they operate. Firstly, a vast majority of Nigerians are low income earners. Their income is barely enough to cover all their primary needs let alone to be invested. In addition, the high level of illiteracy in the country effectively cuts out a substantial part of the population who otherwise may have invested in mutual funds if they had the level of literacy required to be informed on such issued.

A lot of work needs to be put into the education of the public (public awareness) on mutual funds, how they operate and the benefits of investing in them. Given the fact that the Nigerian financial market is essentially still at the developing there are very scarce options made available to the investor and are not as diversed and varied as is obvious in other countries. What makes a good investment is absolutely subjective and depends on the rationale of the investment, that is the plan of the investor whether long term or short term in terms of the period of investment and also whether the intention of such investor towards the fund is for capital appreciation, provide a steady income stream or a hybrid of these factors. Moat importantly is that maximum value is gotten from investment while simultaneously ensuring minimal risks. You can buy mutual funds directly from the companies that manage them. You can also go through a broke, but be sure to investigate the fund properly long-term investors should ignore all bond funds and those funds that invest in a combination of stocks and bonds. Go through past records of funds before investing in any of them. Also look at the managerial team, and ensure that the fund you invest in has the right managerial team to give you what you want. Some of the funds that have solid past records do not still have the managerial team that took it to that height. Invest in funds that have sailed through the good and bad time.

Now another difficult problem is what types of funds to choose from. Because mutual funds have specific investment objectives such as growth of capital, safety of principal, income and hedging of against depreciation in Naira, you can select one fund or any number of different funds to help you meet your specific goals. Mutual funds fall into the following groups:

- Equity funds: These funds invest in shares of common stocks.
- International funds: Seek resources to invest outside Nigeria. These funds provide investors ample opportunities to avoid putting all their eggs in one basket. Some investors are unfamiliar with foreign investment policies and currencies and may not have a dear understanding of how economic or political events affect foreign securities. An investor in international fund doesn’t have to worry about trading practices, record keeping time zones or the laws and customs of foreign countries because the fund handles all of them.
- Fixed income funds: Are funds that invest primarily in corporate or government bonds and stocks that have a fixed rate of return. Their objective is to provide a high current income consistent with the preservation of capital. Capital growth is of secondary importance. This type of funds are suitable investors who want to maximize income and who can assume a degree of capital risk in order to achieve this.
- Money market funds: Provide stability of capital while seeking a moderate to high current income. Their investment is very liquid, short-term debt securities and have no potential for capital appreciation. Such funds are suitable for investors who want high stability of principal and moderate current income with immediate liquidity (easily redeemable).
- Sector funds: Invest in securities of a specific sector of the economy such as oil and gas, banking etc. they do not offer the sort of risk protection found in funds that invest in a broad range of industries. Although, there is always diversification among several companies via within their sector of operation which is still better than investing in just one company. Sector funds offers, sharp capital gains in cases where the funds sector is in favour but also offers the risk of capital losses when such sectors are out of favour.
Before you go into mutual funding you’ve got to have a plan. Here is a list to guide you.
- Instead of starting your evaluation of a fund with its performance, think about your investment goals-whether you are looking for a current income or an investment for a short-term, then a bond is good for you. If you have a longer-term goal, you might consider an equity fund. If you want appreciation of capital, you need a fond that; invests most, if not all of its assets in stocks. Stock prices fluctuate everyday, so funds that invest in stocks will also fluctuate in value daily.
If what you want is a stream of income, you’ll need funds that invests in debt securities such as bonds. Like stocks, bonds experience fluctuating share prices, although of a lesser degree. If you want to preserve your capital, you will need a money market fund, which maintains a stable share price while providing some income. In return for this stability you have to make do with less income than if you invested, in a bond fund. To seek a bit more income, without sacrificing too much stability of principal, you could choose a short term bond fond. This experiences modest price fluctuations but with higher yields than money market funds.
- Ensure that you are satisfied with the level of management and you are okay with business strategy of the company. Make sure that the company frankly discusses the potential limitations if not you’re getting into a very deep mess. Ensure that the company sticks to what is outlined in its prospectus if not you may be going contrary to your plans. The cost is another major point of concern, there are some funds who marge a lot before you can become a shareholder and this may not be good. Follow the managers records and be sure the company suits your plan.
- Be acquainted with the various prices of funds you wish to invest in every fund has and expense ratio money deducted from its earnings and assets to pay annual operating expenses. The lower the expense ratio, the more the returns the shareholders are certainly going to receive from such funds. Go for funds with high turnover ratios.
- Once you have chosen a fund type, the next step is to evaluate the funds in such category. Read the company’s prospectus carefully. To find out how well a funds performance as been, you have to compare it to its rival funds in the fund type you have chosen.
The bench mark index is also very important, compare the fund to the NSE index to be certain of its creditability.
- Are your interests protected? Excessive trading by just a few of a fund’s shareholders can disrupt operations and boost expenses that all shareholders have to absorb. If you’re a long-term investor, look for policies that protect your interests. Some fund companies limit the number of transactions investors can make within a given period. Some funds hold down trading shares before they’ve been held for a specified period of time. This type of fee which may range between 0.25% to 2% is not a sale fee, because it is paid directly to the fund and not the fund company to offset the costs incurred by the redemption activity. Check the record keeping services of the companies. Some people take record keeping unseriously until they buy funds from bad fund companies. Fund companies offer statements of accounts, and other services that make record keeping convenient for fund holders. Example; before you invest in a taxable account, make sure the fund keeps track of the cost basis of your shares over time. If not, you’ll have a problem keeping records when you decide to redeem your shares.
To know if your funds are doing well, at the end of each financials day, the fund manager calculates the value of the various holdings of the fund. The liabilities of the fund are then deducted from this value. The result of this is called the Net asset value (NAV). Dividing this value by the number of shares in the fund amounts to the Net Asset Value per share which is the price of a single share for that day.
If the company is doing a good job, the NAV per share increases in value and if conversely, if the company has a poor managerial team, the NAV per share reduces in value per day. In the fund investment, you can earn money via.
- Dividend payment: This includes the dividends and interest on the securities the company invests in. the fund pays its share holders nearly all the income except some minor expenses that would be made mention to the shareholders.
- Capital gains distribution: The price of the securities a fund owns may increase. When such securities are sold, the fund makes a capital gain. At the end of the year, most funds distribute such capital gains to investors.
- Increased Net Asset Value (NAV): If the market value of a fund’s portfolio increases, after deductions of expenses and liabilities, then the NAV of the fund and its shares increases. The higher NAV reflects the higher value of investment.
When you invest in a fund, and the expected result is not made manifested, there is no need holding on to such funds. Let us look at good reasons why you should dump a fund.
- Your fund is a persistent loser: The mere fact that a fund has how returns or even losses shouldn’t prompt you to sell. If there is a bear market, you cannot expect your fund manager to turn to Christ. But if this happens for two to three years, by a substantial margin, start thinking of another fund.
- The fund’s investment strategy has changed: If you want a diversified portfolio, then you’ll probably pick up equity funds. Supposing the equity fund managers strays from their area of concern, they’ve not only strayed, but they are leading you astray from your plans. There is no need having a second thought here unless you are willing to also change your plan.
- Change in managerial team of there’s a new manager for the fudn, he may not abide by the same rules, his predecessor abode by. Ensure that he does not down turn your funds to make losses otherwise you quickly pack from such funds.
- The fund managers are not straight forward: Some of the professional fund managers are often not knowledgeable in fund handling and as such make sure you are satisfied with the managers in charge at present.

Small vs big (Pt 3)

Chapter 3

The earlier you start, the better your chances of financial freedom.

Investing a few naira a day could make you a wealthy man. With such simplicity, one would wonder why some people are wealthy while others are road side that such beggars. Te simplest reason is that such people lack the knowledge as observable in George S. Clason’s richest man in Babylon”. Those that have the knowledge lack the discipline to adhere to its simple biddings. Some of us are so used to procrastinating events that we do not realize we procrastinate our chances of stepping above our present level procrastination is very expensive, it costs a fortune because by each ticking of the clock, your supposed fortunes ticks away from you. It requires a great deal of consistency to achieve wealth. Whenever you handle a naira, do not consider it a mere paper but a great soldier that has the power to bring a large fortune to you that’ll be benefiting not just to you but to future generations. The only condition required is that you start now. Never procrastinate. You’ve got to value money as though it were a precious jewel. Teach your children to value money lest when you’re gone, your wealth goes with you. There’s nothing more cherished by you than what is achieved via your hardwork. Imagine sketching a portrait of yourself, you cherish it more than a portrait you pay others to do for you even if it has no resemblance to you so also should you hold money dear to you. Gain control of your money by setting a system for organizing your financial life. There are ways of staying rich, which are earning more or spending less your budget reveal tiny leakages that allow money out easily. Let’s imagine an ideal budget. The first leak is called giving which includes your contributions to religious purposes, charity and others. You pay yourself the rent ten percent of your money. The third category is a category for taxes. All levies that have been paid must be included in this category. Category four comprises of all forms of payment for your property. The fifth should include all household expenditures from food to clothing, this takes the largest chunk of your income. Then the sixth category should include expenses of all forms of transportation boarded. It also includes the sum expended in the repairs of your vehicle. The next category is for all expenses away from home such as fastfood as is obvious with we Nigerians. Then comes category 8 for all forms of insurance. Then category 9 should cover all debts of any and finally category ten should take care of business expenditures. Analyse yourself carefully, how many times a day do you spend money? Only a few times yet those few decisions can make all the difference between poverty and wealth. The idea of budgeting and planning our finances to most of us is too tiresome. The olds for practicing this is that you are going to live well past retirement age, and the decision rests on your shoulders today. Have you ever come across a five naira note on the floor, I’m sure you pretended you didn’t see it. How may of you would see a Ghana-must-go bag with five naira notes and just walk past it? Just the hidden truth is that beneath every five naira note with bundles billions of naira. What we always want is to fast cash. We always want much money which we cannot handle.
Note: Wealth does not satisfy desires but changes your desires, so your ability to control your desires is a boost to easy wealth. I hear some people delegate everything concerning them to other people to handle but it should come to your notice that you can never assign this to any other person but yourself. Here you are responsible for yourself. Financial accountability always seems too tedious to some of us yet they must be a part of you to succeed. In order to be wealthy, you must have a great deal of discipline.

Small vs Big (Pt 2)

Chapter Two

Basically, a school is very important in the grooming and development of a complete individual. By school, I mean an association of individuals that are brought together because on one motive which is to be taught or to learn from each other. But a school cannot make one wealthy because like I wrote in the proceeding chapter, wealth creation cannot be taught. Most of the world’s best entrepreneurs are academic drop outs or academic failures. Richard Branson the Chairman of virgin group of companies for instance did not have a complete formal education because he realized that what he got from school did not conform to his ambitious.

The most intriguing part is that he started his career right from high school. Even though his first blow wasn’t very successful, he never gave up and this paid up for him as today he is the worlds largest brand maker.
A school is a place for development of talents, acquisition of skills etc. Today the school does not carry out some primary function as mentioned above but rather has gone astray. This is the reason why many Nigerian graduates are not qualified for jobs in their chosen profession. In the Nigerian society today, people without a complete formal education are all but qualified for skilled jobs. Their pay is very low, and atimes are victims of discrimination in their places of work. Also in Nigeria, the university is the only safe Haven towards solving a good job. Some positions are left vacant for only federal university graduates. Therefore with this forms of discrimination how then can someone be wealthy? Let us look at the following ways of tackling our finances in a society like ours.




- Never spend much money on liabilities; Liabilities are expenses incurred that do not contribute to the accumulation of wealth but inhibits wealth spend money on assets. On the contrary to liabilities assets are expenses incurred for the generation of further wealth. “Good investment” is a perfect example of assets.
- Avoid self-limitation. Limiting yourself mentally, reduces your productive capability. You should never tell yourself I cannot; always try to forget ahead knowing that ‘you can never be too rich no matter where you are. Task yourself mentally by asking yourself what the prospects are to achieve your set goal. Some people call themselves failures unprivileged etc because they’ve tried once or twice without success. Such names reduce you both mentally and morally they make you give up. Thomas Edison the invent our of the incandescent lamp tried nine hundred and ninety nine times without success but he was never a failure because he never gave up. Remember no one is a failure until you give up.
- Let us consider the Richest man in Babylon by George S. Clason. This is a book I never get tired of reading.

“Babylon as at the time was the richest kingdom in the world. Although a very rich nation its citizens were sinking in the seas of poverty. The king became worried and wondered why so few of the people acquired the gold. The chancellor investigated and brought back his observations that only a few of the people had the knowledge of safekeeping part of the gold they received. For others to be taught how to keep a part of the gold. Arkard, then the richest man in Babylon was called upon to handle the job and he titled his lecture “the seven cures for a lean purse”.
They are

1. Start fattening your purse. The very first he prescribed was for every ten coins earned, a tenth of it should be kept.
2. Control your expenses. To do this, you do not confuse your “needs” with your “wants or desires”. Everybody is with more wants than he can actually backup with money. A budget must be made for the necessary expenses. The budget reveals the crevasses and holes in your purse and enables you to seal them.
3. Multiply your wealth. When you have been able to control your expenses, your wealth should multiply. A man’s wealth is not the amount of money he carries about but the golden scream that continually flows into his purse. Put each coin to labouring that it may reproduce its kind and multiply your wealth, a source of continous wealth. Relating this point to today’s world, though gold is no longer in use, we still have expenses to handle. By trading part of your earned income properly, you should multiply your wealth.
4. Guard your treasures from loss. Learn to invest your income only where it is safe where your money could be recollected when desired with fair interest. Seek relevant information from very reliable sources study carefully before entrusting your money into any investment, make acquaintance with the risks involved. Here is how his first investment went.
- “My own investment was a tragedy to me at the time. I entrusted the guarded savings of a year to a brick maker named Azmur, who was traveling over the far seas to tyre and agreed to buy for me the rare jewels of the Phoenicians. These we would sell upon his return and divide the profits. As it happened, the Phoenicians were scoundrels and sold him bits of glass. My treasure was lost. Today, my training would show to me at once the folly of entrusting a bricklayer to buy jewels.
5. Make your home a profitable investment. Money lenders gladly consider the desires of men who seek homes and bind for their families. Readily, may you borrow to pay the bricklayer and builders for such commendable purposes if you can show a reasonable portion of the necessary sum which you had provided for the purpose.
After completion of the house, you can pay the money lenders with the same regularity as you were paying the Landlord. This is because each payment reduces your indebtedness to the borrower and will reduce your cost of living, making available more of your earnings for pleasure and gratification of your desires.
6. Insure a future Income. The man who because of his understanding of the laws of wealth acquires growing surplus should give thoughts to those future days. He should plan certain investments or provisions that’ll endure safely for many years, yet will be available when the time arrives which he has so wisely anticipated. There are so many ways a man may provide for his future. Summarily, his sixth lecture was on investment. By so doing, you accumulate wealth for yourself and to keep you going at a time you are unable to keep your job going.
7. Increase your ability to earn. He said “a young man came to me complaining that his income from his job was not enough to pay his expenses. There upon I told him that this being the case, he was a poor customer for the money lender, as he possessed no surplus earning capacity to repay the loan. The man told me that he had been going to his employer six times weekly to seen an increase in his wage but it has always been to no avail. According to Arkard the man possessed what was required to earn more, a proper and commendable desire. Desire must precede accomplishment. The secret of people whom today serve as our idols role models etc is their determination before anything can be accomplished. The man lacked a basic principle towards earning more which is determination. There are many channels via which an individual can earn more even without a raise in wage. He lacked knowledge. The seventh and last remedy concerns cultivating your own powers; to study and become wiser; to become more skillful; to be more determined; act big, think big and talk big. Always carryout the affairs of man change and improve because keen minded people seek grater skills that would enable them to better serve those upon whose patronage they depend. The more of wisdom we know, the more we earn. The man who seeks to learn more of his craft shall be richly rewarded. Desire should be backed up with determination. These desires must be simple and definite. They defeat their own purpose should they be too many too confusing or beyond a man’s training to accomplish.
Atimes when people are introduced to investment, they marvel and wonder where they are to get money for investment purposes. Unless you take total control of your expenses, the debt burden on you could lead you to an early demise. It is a well known fact that what an individual earns is not a major determinant of his wealth. The reason being that the money has conflicting needs. Our society is constantly changing so also our desires and needs. Certain people prefer sinking in the sea of illusions rather than have the freedom of real wealth. They choose lifestyle rather than riches. Many bosses are the ones that are caught by this problem. They always spend so much money on rather liabilities than assets. They feel investment is waste of good money. They are tied to just what they earn. Some of them rather think that very huge sums of money are required for investments without knowing that you have to start gradually and invest in good ventures. The money keeps increasing and multiplying itself. Some people blame their incapability to the fact that they are from very poor families. Research has shown that people from poor families are more hardworking than their rich counterparts. The fact is that we are on an endless treadmill where we work, generate income, expend our incomes and continue working. Robert Kiyosaki calls it the “rat rice”. It is a race where very hardworking people who choose to toil for their money and not embezzle end up with nothing to show for their labour because the income is already expended before it is received. Riches increase rather than satisfy desires. Wealth creation entails proper financial management. It is difficult for people to practice this because they consider it too risky. Remember there’s a risk in crossing the road and there’s a risk in not crossing the road. Every bit of money we get our hands on gives us the power to choose our future whether to be rich or poor. This money is a little soldier on our battlefield or wealth. Liabilities kills the soldier while assets empowers the soldier to produce more soldiers of its kind to continue battling for your financial security.

The basics towards wealth creation is paying yourself first. Something of note is that your are part of the reason other people get wealthy. Each liability bought empowers another man’s soldier to multiply. Financial intelligence according to Robert J. Kiyosaki is made up of the ability to read numbers, the science of making money from nothing, understanding market trends and the awareness of the laws and regulations governing investing. A combination os all these elements is needed to become successful in wealth creation.

Financial intelligence is necessary for the making of a good investor. Becoming a good and knowledgeable investor comes by experience most times. The media today has made very inexpensive convenient ways of educating you about financial markets.

Big Vs Small

Many times, people feel they are too young or too old to carry out a decision with regards to their finances. Every body has to make certain decisions concerning their finances even if you have the most intelligent financial advisor, accountant etc. The level of poverty in some third world economics are on the increase such is observable in Nigeria.

Often times on the streets you find out those beggars cling from one vehicle to another causing traffic jams and sometimes they are subjected to hazards such as accidents which may eventually lead to their death. When I see such, I wonder if this was the case in eras when every man produced food just enough for himself and his family. Other times, I wonder if they’ve got no knowledge on who to create wealth for themselves. These are people that the rich use to serve their igneous desires. However there are people with well paid jobs that albeit their income, cannot be distinguished from roadside beggars. This is due to that fact that the revenue generated from their jobs runs after so much expense and hence are inactive placing a lot of debt burden on such individuals.

My research has revealed that the major cause of so much poverty is because people lack the wisdom on how best to manage their finances. The Bible itself says “My people die for lack of wisdom”. People attribute their poverty stricken state to all but themselves. They never one day accuse themselves of being responsible for their misfortune.

Once I read a paper with an article about a boy who killed his mother because he claims that the holy spirit had directed him to do so because his mother was an idol worshipper hence retarding the blessing of God in his life. You find out that knowledge is the key to wealth creation. Many other times, people feel that the only way to create wealth is by doing it illegally such as by joining secret societies, practicing rituals, stealing etc.

Many others think that school is the key to wealth creation and hence attend schools cheat and get promoted from one level to another without even getting the basics of what they went to school to achieve knowledge is strength because forewarned is fore rearmed. You know there’s a difference between knowledge and wisdom, knowledge could be passed from one person to another but wisdom cannot. The greatest wealth we are endowed with is our mind. The way we position our mind determines the amount of wealth or debt we accumulate for ourselves.

Wealth is that par of an income that is reserved. It is the net worth of an individual. In our society today, the rich get richer, the poor keep on wallowing in the sea of poverty. The funniest thing is that the people in the society that have very little or no wealth are the ones that make lots of noise.

Once, I was in a class and a question was asked thus “When is an individual said to be rich”. A lot of people agreed that a person is rich if he can fame his expenses so that it is lower than his total income. Then a young boy that was sitting behind stood and said that he considers a parson rich if he has a plan that can keep him going irrespective of future events such as dismissal. A lot of us just look at the present without even a hope for the future. That little boy had responded maturely even more than his elders that were there present. He had set his mind beyond the present, beyond a time when things looked smooth to a time when the road stants being rough. His response boils down to the questions thus in most of us, “what if…” “what of…”, “can you…” etc.

Certainly, the positioning of your mind affects your finances. Everybody is exceptionally talented in life, the key is the mental approach. Success is 90% of the mind, the way you manage it determines how best you succeed.

Let us look at the following extracts of quotes related to success complied by Harry Millner.

- Success has ruined many person.
- Success which costs too much most be considered failure.
- Success makes a fool seem wise.
- Success has many friends.
- Success often depends on negative rather than positive qualities.
- Success is on way of annoying your friends.
- Success is being able to spend your life your own way.
- Success is the best revenge.
- Success may blind us to injustices.
- The hard thing about success is having to keep it up.
- There are successful men but no great ones.
- There is something about success which is displeasing.
- The reward for success is success.
- The first blow is half the battle.
- If at first you don’t succeed that makes you average.
- You must know failure before you know success.
- To be successful, act big, think big, talk big.
- Success is 5% inspiration and 95% of what you know.

Now to be wealthy, you have to act as a wealthy person, think as a wealthy person, talk as a wealthy person. The reward for wealthy is more wealth. A major step towards being wealthy is the first step you take. Wealth creation cannot be taught but can be learned. It is learned through a series of conceptual study and practice. Many times I hear people say that errors are bad. True they are bad but we learn more from our faults than our virtues. If you do not learn from your past you will certainly repeat it. You see failing enables you to succeed because you easily learn from your failures than your successes.

Creation of wealth is carried out through a careful and systematic plan. Many so called professionals are indeed slaves to money in that they foil and sweat for little money. In this case a very large effort is geared towards generation of a very little income. Such income has little or no use because it certainly may not be enough to cover all expenses incurred, hence resulting in debts that are constantly being deferred. Such individuals atimes have two or more jobs in order to make ends meet. There are two category of people (i.e. in the way they handle money this minimizers and maximixers.

The minimizers are those whose income surpasses their expenses. They achieve this via two means either by making more money or by spending less.

The other category are the maximizers that squander all and sometimes above their income. They are always in debt and most susceptible to mental problems. The minimizers do not really avoid expenses but rather they buy assets rather than liabilities. Such assets include stocks, real estates, precious metals etc.