Thursday, August 10, 2017

"Land Speculating- An Investment with huge returns but require a lot of care!"

I first read about Land speculators while in the University some years back, and it was eye opening, I cannot remember which book it was, but it was a book on history in my University Library. Let us look at this investment strategy a bit closer.
A land speculator is someone that buys a large amount of land for little money and also with no intention of using it, then sells it for a larger amount of money to many people to make money when the land appreciates.

Personal Finance

Money and Family Members- The Extended Family

This is a sequel to the first post on money and friendship (Get it here), in this post we are considering your personal financial relationship with your family members, with an eye on the extended, say your Brothers, Sisters, Cousins and the like.
Just as Money and Friendship do not mix well, same can be said of Money and this family members, a lot of people have got their hands burnt for lending money to family members who will not return and will still be arrogant about it. 

Money and Friendship

 Money often does not mix well with friendship, as so many promising friendships are lost based on money issues. In most cases, this happens when friends borrow money and refuses to pay back or when there is a business deal between friends and one party decides to play the smart one and cheats the other. And because of this personal experience, most of us have put our friends in different buckets, hear say, and characters exhibited by the friends in question.
The truth is you are also being placed in buckets too based on the same measurement by some friends. Let us do a quick evaluation of your friendships, quickly list five friends you can do business with without fear of losing your funds, and now list the friends you can never trust with your money (You need not write them out). You see how easy it was to put your friends in one of these two buckets? You reached this decision based on a few parameters best known to you, which might not be correct in its entirety. It is not strange that many people have a lot to say on money and friendship and the need to exercise caution but, the beautiful thing is that we can have a sustainable balance wherein our friendship is secured and our ‘business friendship ‘ is also very secured

Mortgages 101

 Been a house owner via  Mortgage is very prevalent in developed countries, however not in Nigeria due to the high interest rate which is applicable to any other loan that can be accessed here. So what then is Mortgage?
 A mortgage is a debt instrument, secured by the collateral of a specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments, usually monthly. It is a secured form of loan and usually secured with the property being purchased. In Nigeria most commercial banks offer mortgage loans we also specialized banks called mortgage banks whose primary focus is mortgages.
In accessing a mortgage loan, there are few criteria that you must fulfil and there is a limit to the loan you can get for your home, irrespective of your income. These factors may include but not limited to the following:

Key things to know before getting a loan

Feedback from our last  post shows that so many people feel cheated by financial institutions as well as loan providers, this is why I feel we need to look at critical things to look into before getting a loan.
 Note when securing a loan, all charges be it internal or external charges incurred while processing the loan will be borne by you, so let’s take a look at common terminologies as well as costs associated with loan collection

INTEREST RATE: A rate which is charged or paid for the use of money or money borrowed (Loan). Interest rate is often expressed as an annual percentage of the principal. It is calculated by dividing the amount of interest by the amount of principal. Interest rates often changes as a result of inflation or as agreed by the Lender and the Borrower. This is normally expressed in percentages (%).
This is a key factor in loans and it’s one of the elements with which the profitability of the financial institution is built. And it is not a fixed rate because it is a percentage and most interest rates are flexible, it could either increases or decreases, and the financial institution would have made you sign a document saying they reserve the right to change the rate, so it is key for the Borrower to read the loan contract (Terms and condition) well before appending signature, most times we are so excited about getting the loan that we forget the years or months paying it back, this post is not to scare you away from taking loans but to get you educated about the nitty-gritty associated with it. I take loans myself, funding any mega project requires a loan for success, the pillar that sustains any conglomerate is a loan and so on.

Concepts on personal loans.

Personal loan has been used by many to achieve great feats and it as also choked up many. Most people take personal loans to handle financial obligations that savings alone cannot handle in the short run.
How do I mean? let’s look at this example: if one of my personal finance target for the year is to get a landed property, that will cost me a million if I pay now, but the might increase at the end of the year and also I may not get a good location if I am to wait till the end of the year and I have just two hundred thousand in savings, which means I have a shortfall of eight hundred thousand and if I am to save on a monthly basis, I will need a minimum of Sixty Seven thousand monthly for the next twelve month and by that time the value of the land might have moved higher, so to hedge this I get a personal loan to secure the land and I will then pay back, over the period, this example simplifies the advantage of time value of money with loans. As beautiful as the example looks so many times when you do not calculate well it might end up choking you. As a personal finance coach I advise that before you take a personal loan, try to factor the repayment such that it does not choke other essential financial obligations.
Even though I am no averse to loans, I will like to say that the following points are worth pondering upon before you take that personal loan.

Basic Concepts of Credit Cards.

Credit Cards are becoming more accepted in our society as it avail you of the opportunity to access soft loan on the go. It’s important to note that Credit Cards are a recent phenomenon and their ubiquity is owing to the ease with which Banks give these Cards. The reason is that Banks make tons of money through the issue and usage of these credit cards at the expense of the consumers. The hidden costs of credit cards are not known to the recipients of this cards. This money is taken from the vendors of the goods and services who in turn charge you for this extra money that they pay. However, Credit Cards also have substantial advantages if they are used wisely. Just as known in case of credit and debit, the human mind is not prone to prudence and care. Many in western world are in serious debt as a result of having access to credit card funds. The ‘short term pleasure’ of buying stuff from your credit cards is too much to resist for most people. If the credit was unavailable, then people would not have fallen into the problem of debt in the first place.

Bank Statement Review

Let me start by wishing everyone a happy new year, 2016 was a great year for some for the larger population it was challenging and that is why I feel we should talk about little things that cost of money.
And that is our banking relationship, yes Banks make money from us one way or the other, the truth is we cannot totally eradicate hidden charges from dealing with banks, some are not even hidden.

Personal Finance and Risk Part 2

From our last post (Get it Here), we were able to pin point that everybody is a Risk taker, and I believe that most of us would have by now know the category we belong too, but by and large, research as shown that most people belong to the Neutral Risk takers. But can I ask this sincere question, most people say they do not like to take risk at all, but yet their vehicle insurance is third party, meaning you will have to pay for your own vehicle repairs in case you are involved in an accident. And yet you claim you are risk neutral or risk averse.
Let us look at Risk management:

Risk Part 1

Risk is a part of our everyday life and as such we cannot talk about Personal finance and not discuss our risk appetite because so many financial decisions are hinged on our risk level.
 Virtually all areas of Personal Finance have risk elements in it, from Investment decisions to Savings decisions to Spending decisions to borrowing decisions, to changing your job, etc. and therefore we must consider it.

Friday, August 4, 2017

My Personal Finance Story

Hey, my name is Felix (Not real name), I am in my mid-thirties and this is my personal finance story:
I was born into a humble family, where both parents were Civil servants, our family finances were up and down, but we never lacked food and shelter at any point, and all the six children went to good school and at no time were we sent out of school for school fee, it was paid as at when due, how my parents pulled that off I do not know considering their salaries as at then.
One major key for a good life I learned from my parent is the dignity of labor, my dad was an electrical engineer and as such he did contracts, and this was my first shot at making money. I worked and I was paid to the level of my knowledge at par with the others at my level. I had my first proper job as a primary school teacher when I finished secondary school, that was 1996, salaries were paid in cash those days, well packed in envelopes with your name well written at the back, I remember my very first salary, I took it home very proud and I was encouraged by my folks, I can remember I bought a bible with part of the money, yea I love God.