4th February, 2013
Ahead of what I promised to last week, that is , discussing how we can work together in 2013, I felt the urgent need to respond to some of the questions that have poured into my email box. I also appreciate those who created the time to respond to my call from feedback. For those who responded, the FREE I promised should be in your email box in 24 hours. Let us attend to just two of those questions in this edition. We might treat one or two more before I unveil how we can work together in 2013.
I AM IN A MESS, HELP!
•At the moment, I should say I am in a deep mess. Few years back, I was persuaded to invest about N7.5 million with one of the wonder banks. It was a borrowed money .The “wonder bank” consistently gave me 10 per cent interest on my deposit every month but all of a sudden, the interest payment stopped and ultimately both the principal and even the bank disappeared! I want to believe that the money is gone for good.
My stockbroker also persuaded me some time in the past to invest heavily in the stock market. I put in about N20 million including the loan I took. The stock broker kept assuring me that all was well and that I could make 100 per cent within six to eight months. Today that investment is less than N1.5 million naira! And I cannot even dispose of the shares.
The banks are on my neck to recover their money and they are making arrangements to sell the property I used to stand as security not minding the fact that the bank also contributed to my ordeal because they conned me to take the loan. Let me be frank with you, I have lost confidence in everybody —stockbrokers, banks, journalists. Everybody. They have all failed me. Sometimes I feel I may have to rely on prophetic utterances from my pastor who had in the past made some correct predictions. What do you think about all this?
Let us deal first with the issue of reliance on prophetic utterances. I need to say that it is a tricky one and would suggest that you handle this with care. I am by no means suggesting that you should ignore what your pastor tells you but I would suggest you also combine this with getting qualitative information. I am certain about this: God wants us to reason things out by ourselves. Let us assume that you had a revelation through your pastor perhaps that you should invest in the stock of a particular company, one would expect that you would carry out some basic investigations about the company that issues the shares. You would need to find out who the owners are.
You would need to confirm if the people running the business have the relevant skills and competence to manage the company. You would need to collect the company’s annual reports and check its financial conditions. Is the company making profit year in year out? Are its products in high demand? Is the company highly indebted such that the level of interest payment could affect its declared profit? How many other companies are in the same business? You may also need to pay a casual visit to the company to see things for yourself. I don’t think your pastor or God would carry all these investigations out for you. If you go ahead to invest without doing all the necessary home work and you eventually run into trouble on the investment, it won’t be because the prophecy from your pastor was wrong. It would be because you failed to work things out.
I could also sense that you are holding other people responsible for your current financial situation. I would recommend that you brace up and accept personal responsibility for everything that has happened and how you would also get out of it. Someone once said that the moment you start to blame other people for your current circumstances, you have transferred power to those persons and recovery is far away. When you take personal responsibility for everything that happens to you, power returns to you.
I suggest that you analyse your current situation critically and identify what you did not do correctly. It could be that you did not put in place a personal financial plan. Isolate the options that are within your control and the ones that are outside it. Make plans to implement options that are practical and visible. You could discover that there are certain things that you currently have that you can sell to offset your debts. You can also discuss with your bank to work out flexible payment plans. You would discover that there are helps if only you ask the right persons the right questions.
Fundamentally, you should stop complaining to people. Just start to sort things out to the best of your knowledge. Help would come when you least expect. Staying on the same spot is not the solution. Take actions, no matter how insignificant they might appear.
•HOW CAN I PICK A TRUSTWORTHY STOCKBROKER?
I have made a lot of money mistakes in the past but going forward, I don’t want to take anything for granted in my investment actions. Could you offer advice on how I can select a trustworthy stock broker?
I am glad you have decided to take personal responsibility for your financial affairs. First you must find out if the stockbroking firm is a registered member of the Nigerian Stock Exchange. This can be confirmed directly from the NSE or in some of the its publications.
Secondly, you should check if the firm has not been indicted by the Securities and Exchange Commission for any wrong doing. This is critical.
Third get to know more about the management of the firm and their business model. A key question to ask is that should the CEO of that company go on vacation, would the office still run? You should begin to worry if you had to talk to the CEO every time you want to make an enquiry about your investment. There should be other competent personnel working with him.
Fourth, you should agree abinitio with the firm the fee. Don’t be too carried away by low fees. Understand the services the firm would provide. Fifth, when you have done all this, pay a personal visit to the office of the stockbroker and feel things yourself. You have to put all your senses to work on this one. Check for how you are greeted when you arrive. Check for the office interiors. Observe more than you talk at this point. If you do it well, you would know if the stock broking firm is the right one for your money.
How do I get my children to be wise in money matters? A friend of mine said that getting children exposed to money at an early age could ruin their future. At what stage should they be exposed to financial information? Do you have some tips? I have two kids, aged 3 and 6 respectively.
The starting point should be to open a savings account for each of them and make a definite commitment to be saving money in the accounts on their behalf every time there is an opportunity to do so. When they celebrate birthdays, money realised should be saved first in bank savings accounts. After some time, you can then begin to invest part of the fund in some investment instruments that can generate better returns than what the banks can offer.
Once the children are of age, you can begin to get them involved in the financial transactions on the accounts. Take them occasionally to see the manager in the branch of the bank you are using. Get them to ask questions no matter how silly such questions may be. I believe very strongly that over time, your children will be well-adjusted to money matters which they would find useful later in life.
I do not see how exposing them to money matters at the early stage can destroy their future. It depends on what you expose them to really. When someone gives them money, tell them to put it in a piggy bank. Don’t allow them to squeeze money. Teach them other little tips can help to build up their financial intelligence. All this can only help them in future, not destroy them.
Best things always!