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THE CAPITAL MARKET
AND YOU
DESCRIBE RETIREMENT –
If you do not plan, (2 Cor.12: 14) when you retire you may
constitute a nuisance to your children and their spouses or you into
debt and die on queue pursuing gratuity – turn to object of pity and
as a born again you are to be envied, not to be pitied.
Reference was made directly to retirement in Numbers 8: 25 But for
me, I always liken one’s young and employable years and ones
retirement period to the dream of Pharaoh and Joseph being able to
interpret that dream was promoted and Egypt had abundance when
others were hungry and dying –
According to the Bible…instruction, reproof and correction for those
who are still young and have not retired, This write-up is to tell
you that the dream of Pharaoh is a reality of life. If you do not
take action as Pharaoh did, you will be like the Israelites who went
to Egypt to buy food and become enslaved.
According to Joseph’s interpretation of Pharaoh’s dream, your higher
income years (working years) are the lean years. Like Joseph said in
Genesis 41: 31.
If care is not taken to plan some retiree during their retirement,
look as if they had never lived in Ikoyi (Government Quarters) and
some die miserable death queuing for their gratuity.
I am self-employed, what has retirement got to do with it?
Not so brethren…Let me give you a story of Mr. A and Mr. B
Mr. A was a government worker and he acted as if he will remain
young and highly employable for the rest of his life. He did not
plan for his retirement but Mr. B did. When the Military Boys took
over government, they were both retired.
Mr. A was out in the cold. Let me itemise what happened to him
thereafter.
1. Mr. A waited for years before his gratuity was paid.
2. Before his gratuity was paid he had borrowed so much that a good
part of the money was used to pay back accumulated debts.
3. His monthly pension allowance due to inflation and time value of
money was inadequate to take care of his used -to -life style.
Readjustment is not that easy.
4. In an attempt to survive Mr. A went into private business,
because he was a civil servant he had the mentality of relegating
customers’ satisfaction to the background. Now running a private
business, customers’ satisfaction, which determines the success or
failure of the business is strange to him.
5. Because he worked for government most of his life in government
you spend what you control not control what you spend. Towards the
end of a budget year civil servants look for what to spend money
left for the budget of the year. He was used to financial discipline
so his business failed.
My brethren, even if you are in private employment where gratuity is
paid on time you will realise that the big money is not that big
because its not being replenished as you spend it –
Scenario today is worse for the worker that does not have retirement
plan for the following reasons:
1. The short fall of pension fund up to 2(Two) billion
2. Inflation
3. The fiscal policies of the government – Budget deficit mostly on
recurrent expenditure etc.
4. Those who did not plan for their retirement are vulnerable and
they fall victims of 419, because they will suddenly (poverty comes
like an armed man) realize what is waiting.
5. Most economies of the world are private sector led thus,
government subsidies are gradually phasing out.
6. Government contract are becoming difficult to get and with the
Anti-graft, privatization and over invoicing, may not be acceptable
in future.
THE CAPITAL MARKET SOLUTION
Mr. B feared God. So he did not want to default in his covenant
obligation to God and his family; so he started his retirement plan
as soon as he started work, He was very conscious of Pharaoh’s
dream, Joseph’s interpretation and the action of Pharaoh and Joseph.
He also learnt a lesson from Malachi 3: 10. He noticed that God said
pay tithe on all money whether small or big. If God said set aside
10% from all money it means he knew that there is inflation and
other expenses that even that total is not enough for me to meet my
monthly expenses. He knows that if small is not enough, big will not
be enough as long as he has no financial discipline. He saw that God
was also trying to teach financial discipline through tithe.
Joseph recommended to pharaoh 20% for the years of famine
(retirement years) but Mr. B considering is monthly overhead chosen
to set aside and invest in shares 10% every month. When he was
retired with Mr. A, he was looking younger than his age. He had so
much he did not have to depend on his children. From his investment
he built houses for letting. He ate well to mai8ntain his good
health. He did not have to steal during his working life.
STEPS TO TAKE IN PLANNING FOR YOUR RETIREMENT
1. You must have a personal budget
2. Remove your tithe and offering from your monthly salary for
workers and from your profit for selfemployed.
3. Set aside and invest 10% of your income
4. 80% of your monthly income should be allocated to living expenses
5. Cut off expenses that are not necessities Prov. 6: 6-8, Prov. 21:
20
INVESTING YOUR MONTHLY SURPLUSES IN THE CAPITAL MARKET OR START A
RETIRE PROGRAM
Investing in the Capital market means becoming a part owner of the
quoted company you buy its shares. Examples of quoted companies are
Leverbros, UnionBank, First Bank, Cadbury, Nestle, Wapco, Texaco,
UACN etc.
When you buy their shares from the stock exchange your money works
for you. Every year they share dividend some years they give bonuses
and prices of your shares appreciate overtime within 2 years.
STEPS
1. Get a stockbroker – be sure of whom you are dealing with.
2. Tell your stockbroker that at retirement you will want a
particular yaer return fro your investment.
3. Tell him to factor-in inflation you determine the rate of
inflation.
4. Tell him to calculate for you how much you should set aside for
investment in Shares that can give you what you want yearly bysay
when you are in 20yrs, 30yrs, 40yrs or 60yrs from now.
5. Back this with immediate and consistent action. You can invest in
the following ways:
1. You can acquirer shares directly in your name
- Dividends and bonus will be sent to you through your postal
address directly
- IF you do not receive either or both of this in a year tell your
stockbroker to assist you to collect it or you go to the registrar
yourself to pick it. Your do not loose your dividend if unclaimed
until after 12 years. Your bonus even if it is missing cn be
reissued after completing certain forms.
2. You can ask your stockbroker to trade for you and you agree on an
annual return, which he or she will give to you and the principal
amount at the end of the year. You can do this for a year or two and
thereafter you invest all in shares plus your yearly savings.
DO NOT SAY YOU WILL NOT INVEST BECAUSE OF RISK.
Ecclesiastes 11: 4-6 if you think of risk like Mr. A you will
end up like him. Imagine if Pharaoh had thought that Joseph was not
an Egyptian or the grains will be eaten up by some insects or that
some people will steal the grains what would have happened.
What I will say is that you talk to your stockbroker there are extra
precautions you can take to safeguard your investment.
PLANNING FOR RETIREMENT
The earlier you start the better. If you wish to achieve a
particular amount in 40 years from now. If you start now or you
start in 20 years time.
1. More years need less amount= goal achieved *
2. Less years need more amount= goal achieved *
• = Made up of mainly return on investment earned
• = Made up of capital mainly
Assumptions both have the same rate of returns.
IMPORTANCE OF ROI
If you invest N10, 000 lump sum at 25% ROI p.a for 40years is
N75m whereas N10,000 lump sum at 24% ROI p.a for 40,000 years is
N54,559,126 in the same length of time nearly N21m difference.
Lump and annual amount
If you investN10, 000 in year 1-40 and you invest N1000 per year for
40 years at a ROI of 25%
1. N10, 000 invested and not added but growing at a compound rate of
25% p.a grows to N75m
2. N1000 invested p.a for 40years or a total of N40, 000 invested (4
times as much) only “grows” to N30m
THE VARIABLES REQUIRED BEING ABLE TO KNOW WHAT TO INVEST AND HOW
TO ACHIEVE YOUR TARGET.
Amount involve for variables namely, the amount available, the
amount needed, the time period and the ROI or earning rate.
If in 10 years I need N20, 000 save 1000 p.a
• You do not have to invest N1m to end up with the earlier you
start, the less you have to save. The later you start, the more you
either have to save or ear in return (and therefore take more risk)
• The guaranteed key to financial success is never spend more than
you earn. Tithe, Pay your taxes set aside something for tomorrow and
spend the rest.
• You must spend less than you earn in order to achieve your
long-term financial goal
• I believe the very basic nature of man (time to work and time to
retire) so there is nothing that you and I can do about it except
plan for it like pharaoh did at the advice of Joseph and convert the
lean years to plenteous years.
INFLATION
- Inflation destroys the purchasing power of the money already
accumulated.
- Inflation requires that you continually earn more just to stay
even with the increasing costs for the goods and services you need
to live on.
- Inflation has a compounding effect that makes the magic of
compounding work against them.
Truth is always simple. The money you spend bring the first the one
you save and invest bring the latter.
- Some earn more than others. Some have much larger families to
support. Yet all purses were equally lean. It is natural with men
that what each of us calls our necessary expenses will always grow
to equal our incomes unless we protest to the contrary.
- People confuse their necessary expenses with their desires. Human
desires are in satiable. Most people spend their earnings to gratify
their desires in so far as they will go. Still thou retain many
ungratified desires.
- Multitude of desire but limited resources to satisfy them.
BUDGET STAGE I
Write out all you want to spend money on.
Select those that are necessary
Select from this list those that are possible through the 80% left
Cross out the rest and consider them but a part of that great
multitude of desires that must go unsatisfied and regret them not.
STAGE II
Budget thou thy necessary expenses
6. Do not spend your tithe and savings another 10% for investment
7. Let paying your tithing and saving another 10% for investment be
your great desire that you fulfill
8. Keep working with your budget keep adjusting it to help you.
9. Make it your first assistant in defending your
savings/investment.
BENEFITS OF BUDGET
1. It helps you to save and invest for the future
2. It helps to get our necessities as it is attainable
3. IT also enables me to realize my most cherished desires by
defending them from my casual wishes.
Budget shows up the leaks from my purse and enables me to stop them
and control my expenditures for definite and gratifying purposes.
I budget my expenses that I may have money to pay for my
necessities, my enjoyments and to gratify my worthwhile desires
without spending more than 80% of your earnings.
A man’s wealth is not in what he saves but is in the income he
builds
The life of every man starts from childhood to old age. This is the
truth of life.
It becomes Christian to make the preparation for a suitable income
in the days to come and to make preparations for his family’s
comfort and support when he is no more. He should invest in shares
to reserve the value of his treasure for the future.
Provide in advance for the needs of thy growing age and the
protection of your family.
As you are aware God gave you that salary you earn just like he gave
those servants in Mathew 6 (Parable of the talent) others invested
and multiplied theirs but the one did not spend it, he saved it in
the earth. The master said you could have at least invested it in
the Bank to yield interest that means there are other investment
that can give return to more than the Bank and one of such is the
capital market. The return from the capital market is a three-fold
return. You know a three-fold cord that cannot easily be broken –
Dividends, bonus and price appreciation.
Working life responsibilities and retirement responsibilities
I Tim. 5:8, 2 Cor and you must have enough in the lean years to meet
your responsibilities.
That you are born again does not shield you from the consequences of
your plainlessness (the lean cow ate up the fat ones and they were
as if they never ate) after all, Joseph’s brothers and father were
children of covenant(because they refused to accept the position God
gave to Joseph they could not be patient enough to see those years
of famine) but because they did not plan they were famished and the
Egyptians even though they were not children of covenant had plenty
and even sold at exorbitant profit to other nations, because they
planned.
You will say they did not have the dream of Pharaoh but they were
the 1st that God start revealing to in phases. But they refused to
accept joseph in the roll in was going to play as the investment
adviser so they sold him out for peanuts. So God stopped furlther
reveal to them. Because God does not lie he promoted him as he
earlier revealed in the dream.
REASON TO HAVE RETIREMENT PLAN
At old age you need money if you failed to plan properly of age you
may be sent to old people’s home where you can’t
THE CAPITAL MARKET
PLANNING FOR YOUR RETIREMENT
Planning: Is the allocation of limited resources to unlimited
alternatives.
Retirement: To stop doing one’s regular work especially because one
has reached a particular age. Num. 8: 25
Planning for retirement means allocating your limited resources to
take care of your needs during your regular working life and to take
care of your anticipated needs when you retire.
I always liken one’s working life and retirement life to the dream
of Pharaoh (Gen. 41:1-17) as we already know; the Bible is for
reproof, for correction, for instruction in righteousness (II Tim.
2:16).
For those who are still young or still in employment (self-employed
inclusive), this write-up is to tell you that the dream of Pharaoh
is a reality of life.
If you do not take action as Pharaoh did when the dream was
interpreted unveiled to him by Joseph, you may not be able to
fulfill your covenant obligations to your family 2 Cor. 12:14, I Tim
5: 8.
According to Joseph’s interpretation of Pharaoh’s dream as it
relates to you, your higher income years (working years) are the
years of great plenty and your retirement years represent the lean
years. Gen 41: 29-31, He recommended to Pharaoh to set aside 20%
during the years of great plenty in anticipation of the lean years.
You should plan for your retirement by setting aside and investing
money on your Children’s education, having a house you can retire to
and having enough income to at least maintain your standard of
living when you retire. We have seen retirees who, having lived in
government quarters in Ikoyi and having so many cars, do not even
look as if they had ever tasted good life.
Some have died queuing up for their gratuity.
EXAMPLE: A Story of Mr. Anthony and Mr. Babalola
Mr. Anthony:
Mr. A was a government worker and he acted as if he will remain
young and highly employable for the rest of his life. He did not
plan for his retirement but Mr. B did. When the Military took over
government, they were both retired.
Mr. A was out in the cold. Let me itemise what happened to him
thereafter.
1. Mr. A waited for years before his gratuity was paid.
2. Before his gratuity was paid he had borrowed so much that a good
part of the money was used to pay back accumulated debts.
3. His monthly pension allowance due to inflation and time value of
money was inadequate to take care of the life style he was already
used to.
4. In an attempt to survive Mr. A went into private business.
Because he was a civil servant he had the mentality of relegating
customers’ satisfaction, takes priority and putting customer first
was strange to him to the background. Now running a private
business, customers’ satisfaction, determines the success or failure
of business, is strange to him.
5. In government you spend what you control not control what you
spend. Because he worked for government most of his life he was used
to financial indiscipline so his business crumbled.
Mr. Anthony’s retirement years ate up his working years (Dream of
Pharaoh). Now he looks like someone who has never enjoyed life
before.
Mr. Babalola:
Mr. B was a God fearing man. He paid his tithe regularly. He also
knew that the return of paying tithe and offering was divine ideas.
His salary per month was not enough for all his wants. He decided to
do a budget that will take care of his needs only. This made it
possible to set aside and invest 10% every month for his retirement.
He called his wife and they agreed to do a budget. Thus, unnecessary
expenses were cut off. The children were also trained to be
financially disciplined.
Now let me itemise what happened to Mr. B.
1. Mr. B set aside 10% every month from his salary
2. Since he could not do business side by side with his job, he
sought advice from an investment consultant. The consultant advised
him to invest in shares in Stock exchange. Mr. B was one of those
who bought shares at below N1 equivalent then. The amount he saved
and invested yearly was equivalent toN1000
3. He was consistent in investing this money; and he re-invested his
dividends. He did not sell his bonus shares.
4. At the point of retirement, his investment in shares had grown to
an unbelievable amount that it was not difficult to buy two houses
immediately – one for him and his family and one for lease.
5. Before his gratuity was paid he was living on his dividends from
his investment.
6. He was still able to maintain his life style.
7. He had so much money, he did not have to depend on his children
8. He was looking younger than his age.
WHY YOU MUST PLAN:
If you do not plan, you have planned to fail.
It is more expedient now that Christians should plan for the
following reasons:
1. The short fall of pension fund in the public sector is over 2
trillion Naira. Previous Government did not invest it, but spent
from pension fund. This is one of the reasons why payment of
gratuity and pensions are delayed - the money is not just there.
2. Inflation: It reduces the value of money. Some of the reasons for
inflation here in Nigeria are:
a. Rising cost of production. Most inputs have import content. Cost
of Electricity, fuel, telephones etc have risen in recent times.
b. Excessive deficit financing by government.
c. Imported inflation – so many goods are brought in from other
countries already suffering inflation.
Inflation works against those that do not invest and works for those
that invest. The rate of return from very well selected portfolio
outperforms inflation rate.
3. Anyone that did not plan for his retirement, as he gets closer to
the time of retirement always feels poverty around the corner like
an armed robber In an attempt to make up for the lost years they
want quick and high returns and the fraudsters (419) welcome them
home with very enticing but deceitful investment opportunities.
They are vulnerable and they become victims of fraudsters (419).
4. For efficient allocation of resources most economies of the world
are now private sector led. Thus, government subsidies are gradually
phasing out.
5. Government contracts are becoming difficult to get. With the
Anti-graft Commission and privatization, over invoicing may not be
acceptable in future.
STEPS TO TAKE IN PLANNING FOR YOUR RETIREMENT
1. You must have a personal budget
2. Remove your tithe and offering from your monthly salary for
workers and from your profit for self-employed.
3. Set aside and invest at least 10% of your income
4. 80% of your monthly income should be allocated to living expenses
5. Cut off expenses that are not necessities Prov. 6: 6-8, Prov. 21:
20
INVESTING YOUR MONTHLY SURPLUS IN THE CAPITAL MARKET
Investing in the Capital market means becoming a part owner of the
quoted company you buy its shares. Examples of quoted companies are
Leverbros, Union Bank, First Bank, Cadbury, Nestle, Wapco, Texaco,
UACN etc.
When you buy their shares from the stock exchange your money works
for you. The returns from the Capital Market consist of dividends,
bonuses and capital gains.
STEPS
1. Get a stockbroker – be sure of whom you are dealing with.
2. Tell your stockbroker that at retirement you will want a
particular rate of return from your investment.
3. Tell him to factor-in inflation. You can determine the rate of
inflation.
4. Tell him to calculate for you how much you should set aside for
investment in Shares that can give you what you want yearly by say
e.g. when you are 20yrs, 30yrs, 40yrs or 60yrs from now.
5. Back this up with immediate and consistent action. You can invest
in the following ways:
You can acquire shares directly in your name
- Dividends and bonus will be sent to you through your postal
address directly
- IF you do not receive either or both of this in a year tell your
stockbroker to assist you to collect it or you go to the registrar
yourself to pick it. Your do not loose your dividend if unclaimed
until after 12 years. Your bonus even if it is missing can be
reissued after completing certain forms.
3. You can ask your stockbroker to trade for you and you agree on an
annual return, which he or she will give to you and the principal
amount at the end of the year. You can do this for a year or two and
thereafter you invest all in shares plus your yearly savings.
DO NOT SAY YOU WILL NOT INVEST BECAUSE OF RISK.
Ecclesiastes 11: 4-6 if you think of risk like Mr. A you will end up
like him. Imagine if Pharaoh had thought that Joseph was not an
Egyptian or the grains will be eaten up by some insects or that some
people will steal the grains what would have happened.
My advice is that when you operate with a stockbroker there are
extra precautions you can take to safeguard your investment.
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