 Thank you for staying with us. It's still the breakfast on plus TV Africa at some point There was this t-shirt that was raining for the young ones my money grows like grass I had a problem with that anyway, but even though people loved it I had a problem with that if your money grows like grass It means it is seasonal would come the dry season will come and kill the grass I told that that's my thinking and then I saw you a money You can make your money grow on trees that made more sense to me And so we were able to drag in an investment banker a member of the Institute of Chartered Accountants of Nigeria Who eventually works with an investment firm? FBN quest we're glad to have in the house this morning to talk on this issue Mr. Donatsu's on Moja. Good morning and welcome to the program Okay This time money is not growing like grass You can make your money grow on trees is that it's a term that you people in the financial sector use So what does it really mean for money to go on trees? Thank you very much for the beautiful question and to answer your question very straightforward Money actually does grow on tree however Money growing on tree is a construct that refers to the fact that for you to grow wealth For you to make money There has to be that deliberate plan right to true financial planning to set aside money from what you and or from what you have Not just saving but investing so that you can generate return and when you generate those return They come like fruit on the trees then you are able to plug it So it is a construct that refers to taking deliberate steps financial planning to Set aside money from what you earn and then invest and then make some very good return So thankfully we are in the new year and this is the time where people are setting up financial goals and delight So this is the right time to sit down and act yourself as a worker How much can I afford to set aside so that I can not just save because saving is not Won't make your money grow it is the catch is in you investing and making good return Okay, I'm a farmer This one is I'm a farmer. This is not me. I'm a farmer. Let me use rice for instance You are from an agrarian community as well. So you should know this now When you want to invest is like planting rice, but there is rice that can mature in two months There's rice of three months. There's rice of six months even so when we are looking at investment everybody that the layman Like us we always think about a long-term plan and we were joking with a rumor before that Nigerians say Now who don't job better full feed save or invest? Okay, so When you're looking at investment What are the terms, you know that you can invest in and get returns like terms like how much how long will it take? before an investment can Become a fruit for you to enjoy Thank you very much the shortest and the longest Thank you very much for the question and a very important and good question like that So the truth of the matter is that when you set up for investment the first great point of call is what is your investment objective? Are you setting aside fund from your salary fly salary and am I setting aside? 5,000 10,000 50,000 from what you and then secondly There are all kinds of investment buckets that are valuable There are ones that you can end return in a very short time 30 days There are some that you if you want you can go for long that you know, but of course before you set out for investment There are three basic factors that are very important. The first is what is the investment objective? Number two, what is your rigs profile or your rigs appetite? Are you happy to take risks? Do you understand rigs because if the concept is a concept if you know that the higher the Higher the So these are the three basic questions we have to answer face Based on that then we can get them we can get the appropriate investment that match those three Variable those three questions that you have answered. So there are investment that you end return almost immediately 30 days 90 days 60 days there are some that you need to Wait for a little time, you know, if you go to equities for example now You are not into just in after one week after 30 days you want to take out your money It doesn't work like that today and various investment bucket various portfolio that you can tap into So how do you how do you get to identify this? Investment portfolios like how do I see one and I said and I say this is an opportunity For me to invest in right now and not when it's too late because sometimes you might say I want to invest that this is my financial goal for the year But in the middle of the year your money is already gone and you're like I can't so how do you start to spot? These opportunities so you can join in quickly So thankfully that's why you have the investment managers, right? Like the firm that I work with a real quest asset manager Asset management now the first thing you do for you is we are there We are in the market and we see all the various options that are available So if you come to us, I say look I am this much or this is January My my housing allowance will be paid to me in January and before we pay that rate is around June So I want to keep this money in a safe investment bucket. I don't want to take it However, I want to generate return so that by time I'm paying my rent I know that I've saved or invested or generated some fruit or some return for myself So if you are not if you are not investment savvy, if it is not a space Then the right thing for you to do actually is to talk to an asset manager who will guide you Who will onboard you and give you all the various options that you can invest and a very good Yeah, before we go to specifics, how do we get this investment managers? Is it that every bank has them has a section That has investment managers or investment firms are separate entities that you have to work to to get this kind of advice Okay, thank you very much. So the banks the commercial bank deposit money banks. They are separate They are regulated by the central bank of Nigeria. However, for the asset managers for the investment managers, they are regulated by sake By securities and a state condition. So if you seek out of them, okay Who are the top investment or asset managers in Nigeria? Who is your friend? If you put it out there, it will come up, you see the list and you pick the one you want If you want, we are happy when we are ready anything We are very ready and we are happy to receive you to advise you so that you can start earning and start growing wealth for yourself Investment, it seems as if you have to have a lot of money before you can invest. How low? I was about to ask you that because okay, so now I have like a spare one million How can I invest? Okay, I have a spare 50,000. Yeah, how can I invest that and what are the returns I might possibly get? Okay, so You can actually start investing with us low as five thousand. There are there are various products Especially around the fixed income space and one of them is the one with the popular one that we call mutual fund So mutual fund allow you to come in as low as five thousand And guess what mutual fund is a collective investment scheme where the sources are put together from all kinds of investors Guess what? No, that's in that fund which are five thousand and Mr. Lagbhaja, the house hundred million Both of you are in the same method So if today No, no, no, what do you mean the same return? That's what I'm doing. Yes, okay So let's assume you are in the mutual fund bucket We have a product that we call for example the money market fund And if you are in that money market fund, let's assume the interest rate today is 10 percent So everybody that is in that pool gets 10 percent And how on of this form? 10 percent of the five thousand So how long is this for? Like so is it every month I'm getting 10 percent or I have to leave it for a year or two years Okay, so interest ordinarily accrue every day what the 10 percent we are talking about is annualized interest rates So if I invest for 30 days for example, I will say okay, how much do I have? I have one million for example What is one million in one year for convenience of calculation? Let's assume it's 100,000 in one year So you divide that by 12 you get for one month divided by 30 days You see what your investment is At the end of it, even daily So it starts to accrue every day And if you have investment app, you can actually monitor daily how much your investment is Oh fantastic So with your five million you can start with your one million that you have so the What nobody should do this time and especially this year is leaving funds idle Inflation as we speak today is 28.2 That means the purchasing power of your money is being eroded So imagine even when we talk about currency unification before Sometimes in June or there about with your 400,000 or so you can get one thousand dollars But today as we speak need about one thousand one point three million to get the same one thousand So money the purchasing power of money is dropping every day. So don't leave money I do invest it in Vehicles, investment vehicle that you can get return generate Boom well, and then of course the proverbial tree so that fruits can start coming from the tree I think one thing I really loved that you said was a fact that you can track your investment because I mean I'm the type of person that if I want to see but I want to see how my money is growing It's just like when you when you plant something you're seeing the photo synthesis You're seeing how it starts to grow and germinate and I think that even like motivates you to want to do more Yeah, so now the hero is my question in a changing environment Such as ours, how do you adapt and how do you diversify your investment because at the end of the day? I know you're saying okay the money fund, but I'm sure that's not the only way to invest So how do you start to diversify your investments in the changing? Environment that our economy is now So investing that by saying your investment It's also a function of how much and what you have right and the risk you're willing to take of course So if my investment objective at the beginning of the year just as we are in January now Your goal is to set aside. I want to be setting aside 50 50,000 every month so that by December with the interest and everything I will have Maybe over a million at the rest of them. So you that your objective If you would if you safe 50 you said 50 So this is the amount you get of course is subject to what you invest. So if you are keeping 50 50,000 Of course you multiply by that by 12 That's what your principal will be at the end of the day Then with now the interest that you have generated and guess what the good thing about investing is The moment you start your appetite to do not exactly And when you have grown your wealth or to a certain amount Maybe let's say I've been keeping my 100k now. I have 600,000 I can talk to my investment manager. What are the other options available to me? I mean this pool I mean your money market fund. What are the other objectives that other Vehicle that can end more. So that's okay. Are you willing to do equities? We can do some equity based instrument for you There will not put all your money then can put a portion for you Then if you have some money, okay, can I also invest in effects the new kid investment? I have $20,000. I have $5,000. Can I also invest as well? So as we already diversifying your portfolio So depending on how much you have can invest in a dollar can invest in a fixed income base that is That mirrors and the treasure be like this for the commercial people There's no exposure to equity, however, okay, I am comfortable. I have this 500,000 I want to do equity based because that's where I can end more if inflation is 28.2% the question is What can I end less more than 28.2% because if you don't do that the real rate of return is still negative So if you are in a bucket that is paying you 20% for example per annum and inflation is 28% So the negative real rate of return is minus eight So when you invest and you have accumulated wealth you might be willing to take more risks and what would do for you because okay We can do equity based instrument for you the The equity ngx close here 2023 above 50% And if you go into some sectors 60% so 40 some 39 so you can say okay I need an investment vehicle that can give me return that is above inflation However, all this is subject to the amount of risk you are able to take you are willing to take And that was a reminder. That was about my next question. I said managers are here and are there Professionally savvy they understand the market they understand the game Yeah, because I was like for me. I was telling you I'm gold before he came on but I said I Zero risk I do not want to risk my money for any reason So I'm going to tell you Principal preservation number one objective. Yes, exactly. So we can understand that the exposure to risk is zero I mean if I'm collecting my let's say my housing allowance I don't want to take a risk for example that come when the rate is So how do you get to assess and even manage your risk portfolio in all of this Is that where the investment banker comes in and they get to advise you? Absolutely, and if you want to take a deep dive if you want to have someone understanding We are happy to also explain to you. For example, I tell you that This fund called money market fund for example, the underlying asset A treasury bill issued by federal government which owns guarantee Commercial paper of selected firms that we are comfortable with and the rating agency and the ratings are okay And then some bank placement. So all these guarantees return and guarantees your principal repayment Then we moved to another bucket called maybe equity base. I have a product for example called smart beta That has about 70% exposure to equities. So we'll tell you that so what we've even done is to make sure that We don't leave you 100% exposed to equity We do up to 70% for you and the rest the 30% we even put it in Maybe those that guarantee return so that whatever happened at the end of the day So it's a conversation that we can have and guide you accordingly which bucket to put it So from 5000 That's the good thing now, but what happens to you know now salary is that difficult some some are not paying Some are reducing the salary some they don't have what they're taking home But my concern is what about the people with staggered salary? What I mean is you could be paid a hundred thousand But you're not sure that the next three months they will pay you consistently Now what happens to someone who has invested but cannot be consistent every month Okay, so um when you're investing right You'll be the one to decide that I want to be dropping 50 50 k or 10 10 k or 5 5 k Which is the minimum when it's not convenient for you. You don't pay and you'll not be penalized It's an investment Bucket for example we're discussing the Money market fund for example you bring money when you have and you know some of this investment A bucket also have minimum holding period a money market fund for example the minimum holding period is 30 days So it's even possible that I have saved invested up to a particular maybe let's say like And then there's a need for me to spend 100 k you can come it's an open-ended investment. There's no maturity date You can come after 30 days as you come. I have a need for my 100 k or I want to do farming I want to buy some green where I can go farm So you can decide 50 50 thousand you don't have this month, but next month you have maybe 150 I love and you need a part of it too. You can come and request for it There's a mobile app for it. You can even go from the comfort of home and request for redemption I'll repay it. It's like having a piggy bank You can use flyers But the piggy bank you're only done to do You want to drop that that you get back So my question now is does this come at a cost? So if possibly I'm investing X amounts to your like to your company. Do you charge me on my money? Or do you take something out from when in my chores and Yeah, like people doing card A thousand every day and the person is taking 10% that the same thing So the interest rate interest that we pay is net of Any charges? So we are related by sex the investment space related by sex for example And there are a related fee. For example, we charge management fee. That's not so much Right, so whatever rates they are given to you or you are being given 10% 12% it's already net of Net of any management fee. So you are getting your money straight and Then you will see any charges and the good thing also about The investment banking space the asset management space is the fact that Returns are not subject to So whatever if you drop your money in the commercial bank and you do fix it for example At the end of the tenure We told it has to apply back to you apply even bank charges The 15 Every single every Sunday. I'm debited 200 nara on my phone, which I don't understand. Yes Yeah, okay. So I'm glad that you can invest with a very small amount You can withdraw at any time that you want and you're not going to be charged a visible charge because It is a charge, but it's not visible enough So but but it's still even if it's visible. We know that for Every 10,000 nara if you are taking 1.5 percent that is really really minute. It's it's insignificant It's just that you're taking from a lot of people And then Your principal actually is the return. Yes now. We know we know because I understand For all the funds that are under Asset of that money Yeah, we we totally understand Obviously if you're working, you should be able to get the dividends of your label. Sadly, it's from our money But still we're happy to, you know, I'm glad to give that instead of give to the banks the charges that would they take from me because if I'm investing and In fact, if I'm investing 10,000 nara in the bank. I'm saving rather in 10,000 nara in the bank There's a possibility at december. I would not get like 8,000 So why would I go to the bank? I'm asking for an ATM and first 1,000 nara is off. Yeah. Yeah, and and the same servicing of ATM that is in your post And it's somebody's service. But now let's see when you're talking about investment in a lot of things that We are talking about What is the real problem because I I just wonder why is it that Nigerians have not cultivated this culture of investment because if things are this good Why do we not know about it? Okay, so, you know, the culture is Little bit different. We live in a time where Everybody wants to show up, right? We have a Gucci bag like lady You know, you rather go hungry, you know So I have a Gucci bag And before you know You don't end so much but you are using an iPhone that is So the culture is a little bit different one number two The environment that we are there's a lot of responsibility In fact, these days people even have entitlement the there's this sense of entitlement even on your salary In fact, that we are related and I'm Bring money bring all the money So The expense is always good to meet or even exceed your revenue. So there's always that pressure So people basically look at where we are today. Look at what transportation is doing Look at what other costs are doing. You know, because of the macroeconomic environment Inflation is going up Unification of the currency transportation food inflation is even 35% So how much do you end that you can't see? Okay, wait, wait a minute. There's something that happens in the bank Sometimes there's fraud from one place or the other your money disappears from the bank You go to the bank and they do virtually nothing about it. They don't trace it even though they can they don't trace it Now if something god forbid happens when This money is invested with an investment company. How much insurance do you have over your money? Do you start with You are coming and say i have 100,000 or 50,000 to invest You are not even choosing which bucket to invest in In fact to just digress a bit Instead of me keeping my money in savings account where somebody on traffic and say Point a gun at me and I say bring your ATM Let's go. Let's withdraw your money. Y'all that pressure will be but in investment You don't have that access to your phone Easily you don't have an easy easy access to your phone Y'all that pressure you there's a possibility for you to withdraw that money will come to you But that immediate access is not available. So here monies are insured money are regulated in fact For our environment, you even have to appoint a custodian So for my firm for example, I cannot even use a subsidiary who is happens to be first bank and say i'm keeping my money No, I have to go out So in one of my fund for example city bank America is my custodian You know so already in terms of the regulatory environment the government and make sure that investment is safe The credit rate right environment and all the money are in public Funds that have been that are properly regulated. There's custodian and everything so the money is absolutely safe And nobody can use and insured of course. Nobody can even use ATM to go and withdraw money and give it to somebody because it's under pressure Of because it's under the government Actually must suffer in my own opinion. Okay. Um, we we need to be taking all these Buckets of investments one after the other but that's an issue for another day So because we need to understand them how they are So this is a warning that we are going to drag back here to come and tell us more about these Buckets of investment. There are people who are watching us who are ready to take risk I think they shorter the risk here, but the more gainful Uh, it is but we need to understand these things specifically this is this this is that because Investment as I was growing up and knowing is buying shares. I don't even know what buying shares are What you need to do the processes? I thought maybe you have to own a company You have to own millions of naira and all that but now things are getting clearer So we'll drag you back here for now. I'd like you to just address Nigerians talk to them. This is new year like you said and Let us be on the same pedestal as we move into the new year because everybody wants at the end of the year to be able to achieve one or two things Okay, thank you very much. So my message to Nigerians this morning is that Don't panic because you don't have enough. Nobody has enough There's even a music that say even down but they see the fire We are all looking for money, but we are in january Think about what you aim the cash flow that come to you. How much can I set aside and invest? Trust me as you start there'll be a pattern to even do more You know, so let's all no matter how small let all start from somewhere So that at the end of the day when those emergencies come You are not asking for urgent 2k Your own urgent 5k you've invested them and they've grown to a certain level So when you need your urgent 5k can go to investment and pick and take some out of it You get and then there's something that's you know, we believe that sometimes the moment you have money in your pocket All the problem So please invest them but where there's a need for money and there's no time to please go and take Out of it and they continue investing again. Then at the end of the day you must have accumulated well You build capacity to a particular level and can tell yourself out of this money I want to buy land I want to invest in equity. You cannot take some good investment Decision and if the objective at the end of the day is to go to holiday Either locally Nigeria here or somewhere outside Nigeria You have safe money This means these are not the rest you can decide to take some time Why do I have this feeling that these are pensions people are just short changing us because if I'm if I'm giving Money every month, you know, I've been working In the media for 20 years. So I should be a multimillionaire if my money is being invested in Anyway Well for me, I would be speaking to you even before we drive you back because I'm quite interested in this and I'm looking for ways to invest My money. So yes, thank you for coming. Okay Uh, ladies and gentlemen, this is one thing you you can start with that school fee You need to pay in three months time Why not just drop it somewhere and see what happens at the time that you need to pay school fees? Since we know that it is safe Let's try that one or your rent or your rents that you need to pay after one year We're depositing something into an investment account instead of a deposit account or a savings account And the end of the year you go and remove the one that is left and to pay your your rents and all that There are avenues that we can use to test the waters and see how it goes But like he said it starts with a little drop and then the opposite will grow for you to do more Well, we're hoping to become multi-millionaires at the end of the year Thank you so much for calling on the program So what a wonderful way of ending this program today showing you how money can grow on trees But like we said, we are going to drag him back here Even next week maybe to tell us more about the various buckets of investments And if we're willing to take the risk or not take the risk we'll make our informed choices for ourselves But for now, I would like to thank you for also being a part of this show this morning. Let's do it again tomorrow My name is Nyam Ghul at Gajie. My name is Bruma Kholos and have an amazing day