Smart Investing with Nosa

All that we are as individuals are a result of a combination of the choices that we have made throughout our lives, our environments and the experiences that we have had since childhood. We do not get to choose who our parents are or what families we are born into; the genes we inherit; the colour of our eyes; the colour and texture of our hair; our nationalities at birth; the religions we are born into; and so many other apparently important factors or conditions which shape us into the people we become. We do, however, get the chance to make choices, to make decisions, on a daily basis. Some internet sources estimate that the average adult makes around 35,000 remotely conscious decisions daily, with about 226.7 of those decisions relating to food alone. That is a lot of decisions for an activity that is, on average, performed two to four times daily. For many of us, a lot of our trainings and education, whether in sciences, arts or humanities, have focused on helping us make good,

“Without prejudice to subsection (1) of this section, any employee who disengages or is disengaged from employment before the age of 50 years and is unable to secure another employment within four months of such disengagement may make withdrawal from his retirement savings account in accordance with the provisions of section 7(2) and (3) of this Act” – Pension Reform Act, 2014. I have not had to quote the provisions of any Acts or Laws since I made the switch from being an International Tax consultant to being a Strategy and Transactions (M&A / Corporate Finance) advisor in 2016. It feels like a lifetime ago, and it was only about 13 months after the switch that I left Lagos for Stuttgart. Amidst the thoughts of uncertainty that plagued me as I prepared to leave home in August 2017, for a country where I did not know anyone or speak the language, I also wondered “what would happen to my pension when I leave?”. I managed to convince myself to deal with the present and onl

In the spring of 1997, Thailand spent billions in defending its currency (the Thai Baht) against speculative attacks, finally capitulating and devaluing the Baht in July 1997. This triggered moves throughout the region to defend currencies against speculators. Ultimately, these efforts were not successful and many countries abandoned the effort and allowed their currencies to float freely. The Philippines, Indonesia, and South Korea abandoned their pegs against the US dollar. The currency crisis resulted in each of these four countries having negative GDP growth in 1998, as follows: Thailand (-7.63%) Philippines (-0.58%) Indonesia (-13.13%) South Korea (-5.47%) By the following year (1999), all of these countries experienced positive GDP growth, and in the 10 years that followed (2000 to 2009) average GDP growth rates were as follows: Thailand (4.32%) Philippines (4.46%) Indonesia (5.11%) South Korea (4.68%) Granted, the average GDP growth rates before 1997

On Friday 29 th May, 2020, one of Africa’s biggest banks, United Bank for Africa Plc (UBA), issued a notice of early redemption to investors, exercising the call option attached to the bond at the issue date, thereby informing investors that the bond will be redeemed on 30 th June, 2020. The bond has a principal amount of N30.5 billion (around $84 million, at an exchange rate of N365 to a dollar), coupon or interest rate of 16.45%, and was issued for a 7-year term with a maturity date of December 2021. In this piece, I will explain the meaning of an early bond redemption, the mechanism which makes it possible for a bond issuer to redeem the bonds before the initially agreed redemption date as well as the implication for investors. What is a Bond? A bond is a fixed income instrument representing a loan made by an investor to a borrower (issuer), with the issuer promising, in writing, to make an agreed stream of periodic coupon (interest) payments, as well as to return

“‘Tatty’ (thirty) billion for the account…”. It is fair to say that these words made the famous song “If” by Nigerian afro-beats sensation, Davido, the success that it was. In hip-hop, R&B and afro-beats, where bragging about riches and success is by far the most popular theme, there have not been many songs or musicians who have been able to express this theme as effortlessly as Davido did in “If” (Don’t be dismayed if you do not know the song. Here’s a YouTube link for your listening pleasure). The video to the song was published on YouTube in February 2017. At that time, if Davido truly had 30 billion naira in his bank account – which he has confirmed he did not have -, it would have been worth around 99 million US dollars. Today, that same sum would only be worth around 77 million dollars and is likely to be worth a lot less in another three years. I do not plan on writing about the devaluation of the naira today, besides, I already shared some of my views on this topi

As promised in my last article, Investing during a global recession , today we will explore one of the most important investment vehicles for individuals and institutions – mutual funds. Despite their popularity, mutual funds are often misunderstood or understood only in a limited extent, even by many individuals with mutual fund assets. What are mutual funds? Mutual funds are comingled or pooled investment vehicles through which investors gain access to securities like stocks, bonds, money market instruments and other assets. In a mutual fund, each investor has a pro-rata claim on the income and value of the fund, referred to as net asset value. What are pooled investment vehicles? A pooled investment vehicle is one in which many different investors (individuals, pension funds, corporations, university endowments, etc.) contribute money to the pool to be managed, often by professionals, to achieve specific investment goals or strategies. There are various types of

Investing during periods of uncertainty can be more complicated than investing during almost any other phase of the business cycle, particularly from a behavioural / emotional perspective. It can be especially painful for investors who already had a sizable portfolio at the peak of the cycle, and who may have to watch significant and swift declines in their overall portfolio and net worth – at least before the recovery begins. I have received a lot of requests and questions regarding investing during and after the COVID-19 crisis and I will share my thoughts on some of the most common questions below. Before I proceed, I must say that my thoughts here do not constitute financial or investment advice and should not be taken as such. I would also like to add that I started the Smart Investing with Nosa Podcast (available on YouTube , Spoitfy and Apple Podcasts ) at the beginning of 2020 with the goal of simplifying investment principles and bringing practical insights to these

The Coronavirus continues to spread across the globe, bringing with it fear and uncertainty, as well as high and rising human costs. With almost 2.7 million confirmed cases as at Thursday, 23 rd April, the impact of the pandemic on economic activities has started to take its toll. The extent of the devastation in terms of human lives and on the global economy cannot yet be ascertained with certainty because a lot is still dependent on how long governments around the world are able to sustain the restrictions on social and economic activities, how the virus evolves over time, how long it takes for scientists to develop a vaccine, etc. However, the International Monetary Fund (IMF) has predicted that the world would likely face its worst financial crisis since the Great Depression – the Great Depression began with the stock market crash of 1929, about a 11 years after the world last faced a global pandemic of this nature, and lasted for over a decade. The IMF economic outlook

"Where there's life, there's hope". These words, famously echoed by Stephen Hawking, have never been more apt than in the situation we currently find ourselves in. The world is going through one of the worst crisis in modern history - healthcare, economic, political, etc., all happening at the same time, and it is difficult to predict when things will get back to normal, if things will ever get back to normal or what the new normal would be. There is an overwhelming amount of information that is being circulated across various media platforms. The substance of the information overload ranges from the educative, to the humorous. However, a significant amount of the information that comes to the mainstream are about negative occurrences around the world. A lot of negativity is being passed around in the form of news and statistics. While it is important to stay informed about what is going on around the world, it is also important to recognise the impact that all

With entire industries across the country currently shut down due to the Coronavirus, one source which had continued to generate the much-needed cash and foreign exchange for the Nigerian government was the sale of crude oil, albeit at lower prices . This week, prices declined even further, causing Nigeria’s Bonny Light crude oil blend to sell for around $12 and $13 per barrel. Despite the low price of crude oil, Nigeria currently has about 10 million barrels of unsold crude oil, and traders expect this number to increase in the following weeks and in the month of May. These low prices (compared with prices from 12 weeks before) and the inability to find buyers for the 10 million barrels at such low prices can be traced to the Coronavirus pandemic which is still spreading across the globe. With factories shut down, and transportation and other economic activities put on hold across Europe and Asia (some of Nigeria’s major buyers), there simply is not enough demand to match oil

In an address by Nigeria’s president, Muhammadu Buhari, on April 13 th , he communicated the decision to extend the lockdown in Lagos, Ogun and the Federal Capital Territory, Abuja, for another period of two weeks, due to the Coronavirus. He also stated that pallative measures had been approved and delivered to 2.6 million households, and that these pallatives will be sustained, with another 1 million households included in the scheme during the next two weeks. As has been seen all over the world, shutdowns such as we currently have in Nigeria come at great costs to the economy, and the President has demonstrated exemplary leadership by extending the lockdown, despite the short-term costs to the economy. Of course, an alternative course of action would result in consequences of catastrophic proportions. Unfortunately, making the right decision does not always result in good outcomes. The tendency for good decisions to lead to terrible outcomes is even greater when the decisio