Ways to deal with financial dream killers

When it comes to your life, dreaming big is a good thing. However, it also comes with a lot of unwelcomed opinions from others. They may call themselves realist, but let’s be honest, they are just dream killers.

When it comes to your finances, don’t be afraid to have lofty goals too — dreaming big with your money is also a good thing. Don’t be afraid to desire goals that go against the norm. Having big goals and taking baby steps to reach them is much better than staying stagnant in your financial situation for years and years.

Here’s how to deal with the financial dream killers in your life.

• Ignore the dream killers

There will always be negative people in your life. It’s best to just ignore them.

For example, my husband and I have set the lofty goal of being completely debt-free and mortgage-free at the age of 35, which is in ten years. We’ve received a lot of comments about it.

Well-meaning family members and friends have told us everything from, “It’s good to have debt” to “It can’t be done. That’s a stupid idea”. Many times we have been urged to buy things we don’t need, such as a new car, cable, or sending my toddler to pre-school. But we don’t agree with this because we have other priorities.

Here’s the thing when it comes to your financial goals. They are your goals, no one else’s. Therefore, it should not matter how many nay-sayers you have. We live in times where it’s so ludicrous to be debt-free, and live well under your means, that when you tell others you want to live that way, it makes no sense to them.

• Don’t try to change their minds

I have one brother-in-law who thinks it’s wise to get a new car every three years because having a car loan is actually a better financial decision. It’s much easier to let him have his opinion, and nice, new car because this is his opinion. I can enjoy the benefits of my seven-year-old car that doesn’t have a payment attached to it, because that’s my preference.

When it comes to your personal financial goals, it’s not worth changing people’s minds or arguing over it, especially when it only affects you and your money.

When I wrote about refinancing my home to a 15-year loan, some people felt quite strongly that we were making the wrong decision, and insisted we should have stayed at a 30-year loan.

In the end though, my opinion was really the only one that mattered since the financial decision I make only affects me — not them. You can apply this same principal to your life. Opinions come in so frequently that it’s a complete waste of time to pay attention to them.

And if you think people want to express their ideas about your financial decisions, just wait until you have a new baby, and watch the opinions start pouring in by the truckload.

•. Focus on your actions

Whatever your financial goals may be, actions will always speak louder than words. Do you want to show your family that you can be debt-free, or be wise with your money? Then set up goals and action steps to complete them. Turn your goals into actions and your actions into completion.

A great place to start is reading through the archives of this blog, or the book Dream Save Do by Warren and Betsy Talbot.

Remember, in the end, these goals are yours. If you set a high goal and only complete half of it by your deadline, then you still made much more progress than if you didn’t set any goals to begin with.

In the end, be your biggest cheerleader and don’t rely on the approval of others for any financial wins.

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A GUIDE TO STOCK TRADING FOR BEGINNERS

Before the rise of online trading, getting into the stock market could be a daunting task. Even now, you may feel overwhelmed at the thought of trading stocks. Online trading has made the process pretty straightforward and is an excellent place to get started in the world of buying and selling stocks. Some brokerage firms offer prospective traders tools to actually practice trading. Fantasy stock trading and even games are available that offer beginners a great way to learn the basics and practice trading without using any real money. Once you are ready to start investing for real, you can easily open an account through the website and begin building a portfolio.

The most important part of buying stocks is learning how to pick stocks. Unless you want to completely rely on a broker and let them choose the individual stocks, funds and other investments for you, you will want to learn how to choose the right investments for your individual needs. Many beginners focus on when to buy stocks, gauging the timing in the market and attempting to jump in and out based on the up and down of the market. While timing is important, it is more important to focus on what you are buying rather than when. Study the different stocks available across a range of categories, from mega-cap tosmall-cap stocks, and choose the ones that have the best prospects for success. Stocks that have a reputation for leading the market are always good bets, as are emerging companies that have demonstrated consistent growth. If you are interested in long-term trading, look into health-related stocks and tech stocks.

Best investments for stock market beginners

As a beginning investor, your goal is to create a strong and stable investment portfolio. The best way to achieve this is to make sure that your portfolio is diverse, meaning it includes a range of stocks and investments of varying risk levels. One of the simplest ways for a new investor to diversify their portfolio while simultaneously cutting the risks of loss in ever-changing markets is through investment in index funds.

Generally speaking, an index fund is a type of investment fund that contains every asset in a particular index, such as commodities, real estate, foreign equities or tech companies, allowing you to literally invest in a wide variety of stocks via a single transaction. Index funds are usually quite cheap, though they do have some downsides such as high commissions if you go through a brokerage. However, the advantages for a beginner investor make index funds a great place to start, allowing you to build a diverse portfolio quickly and at minimal cost.

Learning to be successful

Learning the basics of how the stock market works, as well as the timeless strategies that have been utilized for decades, will allow you to navigate beginner-level trading with confidence.

There are many quality sources available both online and offline that not only provide excellent information and advice but can also answer your questions and assist you in making successful trading decisions. Financial news websites, as well as the websites belonging to individual stock traders and investment firms, can provide a wealth of information about the various levels of stock trading and how to go about investing in the markets, as well as up-to-date statistics on active stocks, advice on selecting stocks and creating a solid investment portfolio.

One of the best ways to learn stock trading as a new investor is to find a mentor to help guide you. Whether that mentor is a family member or a friend with some basic stock market experience, or a professional who earns a living as a trader, as long as they have a good understanding of the markets and positive experience trading, they will be a valuable resource as you work to become a successful trader.

You can also learn a great deal by studying the methods of specific firms and traders in particular. The strategies and trading history of someone like Ken Fisher, of Fisher Investments, will provide insight into how you can successfully navigate the stock market and investments in general as well as providing a rich source for information and advice.

Getting involved in the stock market can be intimidating, but taking steps to properly prepare yourself, including learning the basics of stock trading and the markets and constantly pursuing education and advice to stay up to date, can put you firmly on the path to trading success.

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Cadbury, Dangote Cement, Unilever, others drive stock market 1.61% gain

Share price gains recorded yesterday by Cadbury Nigeria plc, Dangote Cement plc, and Unilever Nigeria plc contributed immensely to the 1.61% increase in the value of Nigerian equities market. Market watchers observed profit taking on banking stocks and large-cap consumer goods counters, a development which informed most analysts’ expectation of a bearish close today.

Gainers

The share price of Cadbury Nigeria plc led other 23 equities that gained after it rose from a low of N42.30 to N46.63, up by 10.24% or N4.33; followed by the shares of Dangote Cement plc which rose by 10.23%, from N169.74 to N187.11, adding N17.37. Also, the share price of Unilever Nigeria plc appreciated by N3.04 or 10.22%, from a low of N29.76 to N32.80.

Other equities that recorded price increase include that of Ikeja Hotel plc which rose from N3.04 to N3.34, up by N0.30 or 9.87%; while that of Transnational Corporation plc (Transcorp) rose from N3.78 to N4.15, adding N0.37 or 9.79%.

Losers

Airline Services and Logistics plc led the pack of 35 losers after its share price dropped from N1.83 to N1.66, losing N0.17 or 9.29%; while that of United Bank for Africa plc dipped from N5.16 to N4.70, down by N0.46 or 8.91%.

Champion Breweries plc also recorded share price decline by 7.13%, from N8.98 to N8.34, after losing N0.64. FBN Holding plc declined from N10.51 to N9.88, losing N0.63 or 5.99%, followed by Flour Mills Nigeria plc which recorded share price decline or 2.63 or 5%, from N52.64 to N50.01.

Index trends north

The Nigerian Stock Exchange (NSE) All Share Index (ASI) closed at 34,515.47 points against the preceding day’s 33,967.48 points, while market capitalisation closed at N11.432 trillion against preceding day’s N11.250 trillion. The stock market value increase by N182billion yesterday helped to moderate year-to-date (YtD) loss to -16.49%.

Volume of shares traded increased by 8.39% from 299.913 million to 325.079 million, while the total value of stock traded decreased by 29.02% from N7.596 billion to N5.392 billion in 5,204 deals.

Money market also impressed

At the money market, analysts said the liquidity conundrum cooled-off, as N244 billion worth of treasury bills (T-Bills) mature into the system. “Given increased interbank market liquidity, the OBB and Overnight rates eased an average of 50basis points (bps) to 10.46% and 10.67% respectively. However, the treasury bill market was largely bearish, partly due to the OMO auction; the CBN sold N81 billion of the 182-day bill at 10.96% discounted rate (Vs. N50 billion Offer). As settlement for bond auction further sterilizes the system tomorrow (that is today), we expect yields on treasuries to rise further, particularly the long-dated bills. As expected, there was a notable sell-off in the bond market, as investors re-price assets to primary market rates. Overall, the yield curve rose an average of 25bps, with relative pressure on the short end of the curve,” according to analysts at Associated Discount House Limited.

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Shareholders to get 4 ordinary shares in Nigerian Breweries for every 5 of Consolidated Breweries

Post proposed merger, the shareholders of Consolidated Breweries plc will receive four (4) ordinary shares in Nigerian Breweries plc for every five (5) ordinary shares held in Consolidated Breweries as at the terminal date or a cash consideration of N120 per share of Consolidated Breweries held.

Following the Securities and Exchange Commission (SEC) approval of the scheme of merger and subsequent approval of the Federal High Court, Nigerian Breweries plc and Consolidated Breweries plc have commenced preparations for their separate Court Ordered Meetings (COM) to seek shareholders consent to the proposed merger.

Both Court Ordered Meetings have been scheduled for Thursday December 4, 2014. While Court Ordered Meetings for shareholders of Consolidated Breweries plc will hold at the Lagoon Restaurant on Ozumba Mbadiwe Street, Victoria Island, Lagos from 11am, that for  shareholders of Nigerian Breweries Plc will be held at Zinnia Hall, Eko Hotel, Adetokunbo Ademola Street, Victoria Island, Lagos by 2pm.

The expected benefits of the merger for shareholders relate to: operational efficiencies, access to capital, liquidity for shareholders, shareholder value creation, increased market capitalization, among others.

The proposal to be placed before the shareholders is to combine the operations of Consolidated Breweries and Nigerian Breweries into a single legal entity effected through a Scheme of Merger. The surviving entity of the merger will be named “Nigerian Breweries plc”.

It was further learnt that a decision to merge has been taken by the boards of both companies, in the best interest of each business, its brands and its people. HEINEKEN is represented on both boards, but does not make these decisions on its own, a source close to the deal said.

Ultimately, the proposal to merge will be approved by 75% of the shareholders of the two companies present and voting in separate Court Ordered Meetings. While HEINEKEN as shareholder of these two companies has the right to vote and is in favour of the merger, HEINEKEN has decided not to vote, avoiding any possible doubts on Heineken’s integrity/conflicts of interest in this deal. HEINEKEN’s decision will give the minority shareholders of both companies sole discretion as to whether to approve the proposed merger.

HEINEKEN N.V is the majority shareholder in both companies and its share ownership gives it a right to vote on the transaction like every other shareholder.

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Investors lament negative impact of multiple taxation, poor logistics

Investors have denounced the increasingly difficult business environment in the country, following the persistence of multiple taxation, transportation and ports logistics challenges, budget delays, high energy cost and worsening institutional issues that negatively impact on their margins.

Under the umbrella of the Lagos Chamber of Commerce and Industry (LCCI), the investors, including manufacturers, traders and players in the micro, small and medium enterprises,  unanimously said that access roads to the Apapa and Tin Can port complexes have become an unprecedented nightmare in the last three months, while smuggling, counterfeiting, under invoicing, granting of undeserved waivers, many tax-collecting agencies and imposition of unwarranted taxes have assumed worrying proportions.

Remi Bello, president, LCCI, who spoke on behalf of the investors, said delivery of containers and evacuation of cargo have become a terrifying experience, resulting in systemic traffic gridlock, paralysis of businesses, high demurrages, frequent accidents and risk to bridges and flyovers.

According to Bello, the Nigerian economy is still riddled with unfair competitions, arising from unbridled importation of consumer products, granting of undeserved waivers to individual firms and evasion of import duty payment.

He said the idea of giving revenue targets to government agencies such as the Nigeria Customs Service (NCS) often leads to unfair taxation and burdens on investors.

“Reports reaching us indicate many instances of upward review of values of import in complete disregard to the values of invoices of such imports,” said Bello, during the third quarter press conference held in Lagos.

He stressed that the power sector privatisation is yet to yield positive results, as businessmen, especially MSMEs, make huge expenditure on diesel and fuel as well as pay outrageous electricity bills for poor service.

Though there has been marginal progress in World Bank’s Ease of Doing Business rating, investors say registration of businesses at the Corporate Affairs Commission (CAC) now takes over one week, rather than the 24 hours earlier promised, say stakeholders. But others attribute it to power sector challenges, which muscle the top-line and bottom-lines of investors.

Jakob Bejer, managing director, Heidelberg Nigeria and honorary Danish counsel in Nigeria, said investors were already bearing huge costs of poor power supply to their firms, wondering how the country could be competitive in an atmosphere where most businesses were run on generators.

“We need to see actions. We talk of substandard imports and inability to compete, but how can we be competitive on diesel generators? Businesses cannot thrive in this kind of environment,’’ he said, during the business breakfast meeting organised by the Nigeria-Danish Chamber of Commerce  in Lagos recently.

The investors also said that lending rate has remained on the high side, thereby making it difficult for players in the SMEs to have finance access for business growth. For instance, the average lending rate for manufacturers in 2013 was 20.4 percent, according to the Manufacturers Association of Nigeria (MAN).

ODINAKA ANUDU

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Stock Outlook

Oil trend to determine stock movement

Nigerian markets which have been in freefall lately may continue their decline this week unless oil prices rebound

Nigerian markets officially entered bear territory as stocks tumbled for a 12th day on Friday, with the benchmark index dropping by 3.68 percent to 33,225.75 points at the close of trading.

The NSE – ASI fall brings it 22 percent lower than the 2014 highs of 43,039.45 points reached on July 9.

A bear market is usually defined as a 20 percent decline from a previous high.

Nigerian Stocks are selling off amid concern falling oil prices will spur capital outflows and prompt the central bank to raise interest rates.

Market mood was largely bearish for most part of last week as the market shed points for all five trading days.

Economic Diary

WEDNESDAY November 12

DMO to auction N65 bn in bonds

Nigeria plans to raise N65 billion ($392 million) worth in sovereign bonds with maturities of three to 20 years at an auction on Nov. 12, the Debt Management Office said on Friday.

The debt office said it will auction N10 billion worth of three-year bonds, N30 billion of 10-year debt notes and N25 billion of 20-year bonds on Wednesday using the Dutch auction system.

All the bonds are re-openings of previously issued debt notes.

“For re-openings of previously issued bonds, successful bidders will pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned, plus any accrued interest on the instrument,” DMO said in a notice.

THURSDAY November 13

Q2 2014 Foreign Trade estimates

National Bureau of Statistics (NBS)

Bond Outlook

Higher liquidity to spur demand for Nigerian bonds

Increased money market liquidity after the central bank capped the amount of idle cash that banks can deposit with the regulator will drive demand for bonds by local investors, helping to offset a sell-off by foreign funds.

Nigerian assets have taken a beating in recent weeks on the back of a drop in the price of crude oil.

In a bid to force banks to lend to the productive sector and stimulate economic growth, Nigeria’s central bank restricted lenders and discount houses from placing more than N7.5 billion each as deposits with the regulator.

This has raised the level of liquidity in the banking system and buoyed demand for local debt by local pension funds and other assets managers.

Nigeria plans to raise N65 billion ($392 million) through bonds with maturities of three to 20 years at an auction on Nov. 12.

“We are expecting strong demand at the bond auction next week, with subsequent drop in yields across the board,” one dealer said.

Dealers said banks are expected to increase their position in the short-dated instruments, while pension funds are seen buying more of the long-term debt.

Yields fell at the secondary bond market on Thursday after the central bank announced its restriction on volume of deposits banks could place with it.

Yields on the bench-mark bond 2014 however closed at 12.69 percent compared with 12.56 percent last week.

Currency Outlook

Devaluation risk seen as oil price declines

Analysts expect a 10 to 15 percent devaluation of the currency, around half the scale of what the central bank did six years ago, if oil prices continue their plunge.

The naira has touched new intraday lows nearly every trading session on strong dollar demand, partly from foreign investors and partly from domestic importers worried about the risk of currency devaluation.

Nigeria’s central bank has vowed to defend the naira, despite a drop in oil prices which has unnerved foreign investors and sent its stock and bond markets into a tailspin, Deputy Governor Sarah Alade told Reuters on Friday.

Alade said the naira, which has dropped around 4 percent so far, has been trading outside its preferred band for some time, but the bank will continue to defend it. The bank sold dollars as part of that defence on Friday, she said.

Alade said the bank was willing to defend the naira and would be guided by the dictates of the market to do that, adding that the last time the currency was devalued, in 2008; oil prices were lower than they are now, even though the price is declining.

“At the last time when did that (devalued), we didn’t have the kind of oil prices that we have now, so we are still comfortable,” Alade said.

The currency closed at N165.90 following the central bank’s intervention, after weakening to 173.05 naira intraday against the dollar. It closed at 169.90 naira on Thursday.

The central bank on Thursday restricted the sale of dollars to importers of telecoms equipment, power generators and finished products at its foreign exchange auction, funneling demand towards the interbank market.

“The central bank’s actions are aimed at addressing naira pressures (but) … by transferring USD supply from (its auction) to the interbank market … the naira will come under further pressure at the interbank market owing to strong USD demand,” analysts at Ecobank said.

OIL OUTLOOK

WTI oil expected to climb this week

West Texas Intermediate (WTI) may climb this week, a Bloomberg News survey shows. Sixteen of 34 analysts and traders, or 47 percent, estimated futures will increase through Nov. 14, while nine respondents predict a price decline.

WTI and Brent oils advanced after U.S. employment gains exceeded 200,000 for a ninth month and the jobless rate dropped to a six-year low, bolstering the fuel demand outlook.

Crude rose as much as 1.9 percent in New York and 1.2 percent in London. Payrolls increased by 214,000 in October following a 256,000 gain the prior month that was more than initially estimated, Labor Department figures showed Friday.

The unemployment rate fell to 5.8 percent.

“The market is concentrating on the jobs numbers,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said. “The unemployment rate dropped to 5.8 percent even as the labor force expanded, which implies that more people will be consuming goods and driving. This is all good for demand.”

WTI for December delivery rose $1.07, or 1.4 percent, to $78.98 a barrel at 12:56 p.m. on Friday on the New York Mercantile Exchange. Prices were down 1.9 percent last week and are 20 percent lower this year. The volume of all futures traded was 3.8 percent above the 100-day average for the time of day.

Brent for December settlement gained 76 cents, or 0.9 percent, to $83.62 a barrel on the London-based ICE Futures Europe exchange. Volume was 15 percent lower than the 100-day average. Prices have fallen 25 percent in 2014.

World Diary

WEDNESDAY NOV 12

Redbook

8:55 A.M ET

Definition

A weekly measure of comparable store sales at chain stores, discounters, and department stores. It is a less consistent indicator of retail sales than the weekly ICSC-Goldman index. It is also calculated differently than other indicators. For instance, figures for the first week of the month are compared with the average for the entire previous month. When two weeks are available, then these are compared with the average for the previous month, and so on through the month. It might be more useful to compare year-over-year figures since these are indeed compared to the comparable week a year ago. This index is correlated with the general merchandise portion of retail sales covering about 10 percent of total retail sales.

Why investors care

Consumer spending accounts for two-thirds of the U.S economy, so if you know what consumers are up to, you’ll have a pretty good handle on where the economy is headed. Needless to say, that’s a big advantage for investors.

The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth. This balance was achieved through much of the nineties. For this reason alone, investors in the stock and bond markets enjoyed huge gains during the bull market of the 1990s. Spending at major retail chains did slow down in tandem with the equity market in 2000 and during the 2001 recession. Sales weakened again in 2008 due to the credit crunch and recession.

The Redbook is one of the more timely indicators of consumer spending, since it is reported every week

THURSDAY NOV 13

EIA Petroleum Status Report

11:00 A.M ET

The Energy Information Administration (EIA) provides weekly information on petroleum inventories in the U.S., whether produced there or abroad. The level of inventories helps determine prices for petroleum products.

Why investors care

Petroleum product prices are determined by supply and demand – just like any other good and service. During periods of strong economic growth, one would expect demand to be robust. If inventories are low, this will lead to increases in crude oil prices – or price increases for a wide variety of petroleum products such as gasoline or heating oil. If inventories are high and rising in a period of strong demand, prices may not need to increase at all, or as much. During a period of sluggish economic activity, demand for crude oil may not be as strong. If inventories are rising, this may push down oil prices.

Crude oil is an important commodity in the global market. Prices fluctuate depending on supply and demand conditions in the world. Since oil is such an important part of the economy, it can also help determine the direction of inflation. In the U.S., consumer prices have moderated whenever oil prices have fallen, but have accelerated when oil prices have risen.

The level of US inventories also has implications for Nigeria as oil exports accounts for 95 percent of the nation’s dollar earnings and 70 percent of the Federal Budget.

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Nigerian stocks value declines further by N260bn

The Nigerian stock market has finally entered the bear zone after yesterday’s recorded negative Year-to-Date (YtD) return of 13 percent.

The stock market, which has been at the mercy of continuing sell-off by foreign and local investors, declined by 2.14 percent as evidenced in the decline of the Nigerian Stock Exchange (NSE) All Share Index (ASI) and the market capitalisation.

The NSE All Share Index which opened yesterday at 36,744.46 points closed at 35,958.38 points at the close of deals; while market capitalisation declined by N260bn to close at N11.910trn against preceding level of N12.170trn.

The stock market was further pounded by losses recorded by large cap stocks like Nestle Nigeria plc, Lafarge Africa plc, Nigerian Breweries plc, 7-Up Bottling Company plc, and Total Nigeria plc.

Nestle Nigeria plc lost N49, after its share price dropped from N980 to N931; 7-Up Bottling Company plc dropped from N155 to N141, after its share price dropped by N14; Lafarge Africa plc also lost N9.67, from N99.28 to N89.61; Nigerian Breweries plc declined from N155.94 to N151, losing N4.94; while Total Nigeria plc declined from N157.71 to N155, after losing N2.71.

On gainers table, the share price of Diamond Bank plc rose from a low of N5.6 to N5.8, adding N0.2; followed by Sterling Bank plc which rallied from N2.3 to N2.41, after adding N0.11.

The share price of Mansard Insurance plc also rose from N3 to N3.1, adding N0.1; May & Baker Nigeria plc rose from N1.64 to N1.72, adding N0.08; while the shares of newly listed company Omoluabi Savings & Loans rose from N0.55 to N0.57, after adding N0.02.

Volume of equities traded decreased by 46.83 percent from 752.771m to 400.229m, while the total value of stock traded decreased by 3.92 percent from N4.183bn to N4.019bn in 4,374 deals.

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