 For sufficient wealth creation, apart from choosing the right investment, you also have to give your investment sufficient time to grow. You need to maximize the benefit of compounding by investing as early in life as possible. Now, early starters have the opportunity to stay invested longer, which makes it easier for them to reach various financial goals. Now, the Minister of Works and Housing, the Bartender Fashioner, had said that the federal government is creating wealth through infrastructure development, which provides jobs and market for goods and services. This is also as the finance minister, Zaynab Ahmed, said infrastructure development in the country has been made possible by adequate funding and increased budgetary allocations to the Ministry of Works, which climbed from about $18 billion in 2015 to over $500 billion this year. We will focus on wealth creation and investment on the show today. Welcome to Business Insight and Plus TV Africa. I am Justin Acadone. Welcome back. Patrick Ilodiana is the CEO and managing director of SFS Capital. He is keen about speaking about how people can start your investment journey with ease. Patrick is an investment expert and he is passionate about expanding the investment narrative to ordinary people, not just businesses. Welcome to Business Insight, Patrick. Thanks a lot, Justin. Yeah, let's just dive straight into it now. Oftentimes, people talk about multiple streams of income and when the wealth creation has been talked about, why is it necessary that one has a multiple stream? Thanks a lot. Thanks for having me here. Multiple streams of income is very, very important for a lot of reasons. Having just one stream is extremely risky. Like in everything in life, you should have options because the truth is that the only thing constant in life is change. If you just have one stream, that stream can dry up. So you should always thrive to have two, three, four streams as much as is possible and likely. And also many times when you have more streams of income, it's better because when one income stream is doing well, the other one is doing badly. When one is doing badly, the other one is doing well. So net net, no matter the situation or circumstance, you're more likely to suffer less risk when you have multiple streams of income. And also there's profitability. If you have multiple streams of income, you will learn continuously and some will do well. So you just have to ditch one and go together one continuously. So I mean there are just so many advantages. It's an imperative for good financial health to always have multiple streams of income. It sounds too good to be true and quite easily said and done because we have just 24 hours in a day. We can't even extend it. Some people might even require like 30 hours to complete everything they need to do in one day. But with multiple streams of income, how is it possible to manage time and go around each of them and be profitable in them? The truth is that everything in this life is hard and there is really no pain, no gain. So if you need to have multiple streams of income, you have to put in the work. And everything like Nigeria, you have to manage your resources. Time is the most important resource. You have to be able to allocate it no matter what. So if you allow one stream of income, take 100% of your time, that's a problem. You have to diversify your time. I mean so it's a deliberate effort and it is painful, it's not easy. So if you have a situation where one type of income, maybe your employment takes 100% of your time and does not allow you to develop others, then you should quickly start considering changing to something else or saving aggressively with that one type of income. But either way, your life goal should be to achieve multiple streams of income. So everything in life will try to prevent you from achieving that. Okay, fine. But some people would say that they're not really business savvy, they're not really into trading and they're just used to the regular maybe nine to five kind of job. How do you sell this multiple stream of income to them? You're right. Most people immediately leave school, I'll start from there, you make the leave school should actually do in nine to five. But the truth is that no matter what you're doing, you should also consider that your nine to five should not end from nine to five. If your first stream of income is nine to five, from five downwards, you should be focusing more on your alternative streams of income. You should either, I mean depending on what you're doing at that point in time, you might decide that your best chance is to enhance your existing job. Your best chance is to actually do something else. It might be to do an exam, it might be do a professional exam, it might be to start studying, trading, to start studying or reading something else. But either way, yes, if you think you should do one nine to five, it's perfect. But whatever you do, you should have to create time to read and develop yourself in other ways. If you want to do investing, the standard investing, you talk of stocks, bonds, forex, and there are just so many, but you have to put in the time. Alright. We'll talk about those investment opportunities, but let's really get a clear, maybe some sort of definition to this topic we are discussing today, which is wealth and creation. How do you break it down to the average man on the street? How do you create wealth? First, the first step to creating wealth is accumulating the wealth, because the truth is that many times, people get wealth in tiny bits. So first, you have to, I mean, it's difficult to, it's not impossible, but it's difficult to create wealth from absolute zero. But what is more likely is that no matter what you do, you have to preserve a part of anything you earn. And when you do that continuously, the power of compounding helps you. When you reach a certain threshold, you can now choose what to do with it. So for most of us, it's difficult to create wealth without having some kind of a capital at the time. But for some people, it's possible, when you do not have a capital, but that is business. You now find innovative ways to extract the margin. So for most of us, you have to gradually save up to that point. So let's talk about investments now, which is basically what you do. You are with SFS Capital, which basically is about investment financing and all of that. But the opportunities are bound. Really, when we talk about investment, there's real estate, there's fame tech, there's even the creative industry. Right now, a lot of people talk about it and beat coin and NFTs and all of that. But what are the factors that one should consider in making the right choice of investment? Okay, I'll answer that question, but I'll modify it a bit. Because usually, people do that as investment and that's your business. So typically, investment requires less time, but your business requires basically all your time. When you are doing investment, it's always good to dedicate the time and do your research, but also leverage a lot of other experts. So it's very, very important to commit yourself to researching the investments very well. In real estate, in equities, in bonds, basically. Okay, still talking about investment, a whole lot of people believe that for you to invest, you need to have a lot of monies kept somewhere that you aren't actually using at that particular time. Do you need so much to start up an investment plan? For most investments today, you don't really need that much. For most investments, you can start it off with a little less, 5000 era, some 500 era. But the important thing is that you have to start somewhere. And the important thing is that no matter what you earn or no matter what you have, it's imperative to put some aside. If you earn 100, if you are not deliberate about it, you spend 130. But if you are deliberate about it, you will always spend 80 and keep 20 for investments, no matter what. So yeah, no matter where you start, you can start small and gradually grow up and sort of scale it up. Okay, so if we talk of investment now, what do you really advise? For instance, I'm an entrepreneur, I just started a small business and I'm yet to break even and I'm still trying to meet my expenses and all of that and I don't really have any profit yet. I'm barely paying my worker's salary and all that. How do I not invest in such scenario? Yes, the truth is that it's never easy. But look at it like diversification. If you can eat, because no matter what you're doing, at some point you will eat, at some point you'll cut your hair, at some point you will do some certain things. So the way you allocate some expenses or you allocate things to different things, you must allocate some portion to saving or quote, unquote, sharpening the saw because it's a form of diversification. So no matter what you do, it's the same argument you say for Nigeria that no matter how we are, we should be saving something small because there are very few people that come to the point where their expenses are less than their income. It hardly happens. So just take your investment portion as part of your expenses, no matter what happens. If you eat three times a day, I need to eat twice, then once you remove one meal and invest because that is your plan B. But could there be a thing like an investment plan going bad? I asked this because in the early 2000s a whole lot of people were running towards the capital market. People were investing in equities and all of that. But after a while, the profits of some of those businesses were not really profitable anymore, so to speak, and it was as though the capital market was not doing well, like investing in stock was not as profitable as it were. But looking at where we are right now and that particular term, would you really say it is wise to invest them in the capital market? That's why many times it's very good to do a lot of research in investments. I'll start with capital market equities. The truth is that equities have a lot of risk. And before somebody goes into equities, he should do his research historically and the forecast. But people go into equities with the wrong expectation. Equities are the kind of things you do for a five, six year time horizon and you keep it for a long time. Well, it depends. Personally, I have very, very few equities and that is simply because I think in a country like Nigeria, having equities, there are too many things that affect the price of equities. Even the companies themselves don't affect the price of equities. What CBN does, the fiscal policy, there are just so many things that affect the price of equities, apart from even the intrinsic value of the equities itself. So I personally avoid local equities. It's not that equities is something so different, but local equities I think is too high risk. And even in SFS, at the early stages, we decided to avoid trading a lot of local equities because it was just too unpredictable. No matter how you even explain to somebody that it goes up and down, up and down, up and down, net net, we discover the truth which is that nobody likes losing money. And no matter what happens, if somebody brings in 100 and he has 50, there is no explanation you give him for that reason. So that's why we avoided equities. So if you have a high risk appetite, go and do equities. If you don't, avoid equities. There are other ways to enhance your wealth without things like especially local equities. Alright. Okay. We'll come talk some more. You talked about avoiding local equities, so invariably you're saying that we should patronize international equities. Is that what you're saying in other words? It's difficult to do that. But if you have the opportunity to do, I would prefer international equities to local equities at this stage. Because this might change. For instance, at the turn of 2023, if the elections go fantastic, everything goes well, then at that time, the appetite for local equities might change. But as of now, as I stand today, there is no logical reason that I think that local equities will do significantly well. Or you might, you don't have a strong risk of losing value if you launch into local equities right now. If you're still watching Business Insight and Plus TV Africa, we'll take a quick break. And when we return, we'll come talk some more about wealth creation and, of course, the best investment plan for you. Do join us again. Welcome back. It's still Business Insight and Plus TV Africa. And we still have Patrick Iludia, and we're managing director and CEO of SFS Captain. And we've been looking at wealth creation and making the right investment. Just before we went on break, you were the sweating people from local investment. But let's talk about alternative sources or forms that you could go. You talked about real estate. People would always say that real estate is a good deal. And at times that always the case. Most of the case. Because, you know, for instance, SFS capital, we run two real estate investment trusts in Nigeria. There are only three, and we run two. And they're quoted on Nigerian exchange. And we've done that for many years. So we know quite a bit about real estate. Real estate is good. Real estate is fantastic. But real estate has different branches. And they all have different qualities. Land. In the last 10 years, land has been almost guaranteed. It's difficult to lose money in land. But the problem is that it also comes to its own risks. It's easier to be defrauded in land. It's easier for people to collect your land. Getting the right sources. Land grabbers everywhere. Yes, yes. Excluding forex land has probably been the best investment in Nigeria over the last 10 years. Then you now go to actual houses. Then you now go to things like maybe bonds. But bonds, it's actually a very viable one. But how come it's not really, when I say popular, maybe among the low-income earners, how come they don't really patronize that particular financing option? Because first and foremost, bonds are relatively newer than most products in Nigeria. And second, bonds are going to be more complicated to understand. How so? Because people don't understand fixed deposits. Go to the bank, place money. For a specific time. For a specific time, you get 10% interest rate. Did they even get 10% this time? Yes, you can get 10%. Yes. But on bonds, it's going to be more complicated. And there's a lot of other formulas. I mean, I was around when the bond macros formed in Nigeria and we know how all the work it took to even get people to understand bonds, to start trading bonds. And don't forget for most of the bonds, the minimum volume is like 100 million. So it's not something that the retail person will do. But bonds can be very, very profitable. Because first and foremost, you have a fixed fee. One of the first bonds issued in Nigeria is about 100%. And bonds are tax free in Nigeria. Even Teebles are not tax free. But bonds are tax free in Nigeria. So there are just so many beautiful things about bonds that people do not know. But of course, there's a small advantage in that if you want to go in and out of a bond too often, you can actually lose money in a bond. But a bond is the kind of thing you just buy and hold and wait for some time, especially when you're in Nigeria. But yes, I think that more people should actually invest in Nigeria, especially now. Because bonds are increasing in value. For a new bond investor, this is actually the perfect time to enter bonds. But bonds is for patient money. It's not for money you want to go in and come out. 10 years, 20 years, 30 years? Yes, it's not even that long. Maybe 2 years, 3 years. Just money you can afford to forget for like 2, 3 years. Because the bond prices go up and down. But all things being equal, if you have good advice and work the market, you would probably do better in bonds than in almost all the other fixed income instruments. Okay, fine. Let's talk about a bit of an advice right now. For instance, I like I said, I'm a non-piponio. I have a small business and I've been able to make some profit of 5 million Naira. And a bank comes to me and says let's hold this fund for you. You can put it in a time deposit. And in my little sense of accounting and I'm financing, I know that it is not so profitable to put just put 5 million in the bank for 1, 1, 6 months. Because at the end of the day, whatever you're getting is really, really nothing to write home about. What would you really advise for people who don't really have so much and maybe they have like a million to 5 million to invest, what's the right way to go? Okay, it depends. I'll ask the question of how long are you willing to leave the money for? Say for an average of 6 to 1 year. 6 months to 1 year. If it is because that's actually short term. If you need the money in 6 months to 1 year, then your best bet is to do a mutual fund. A mutual fund. Like SFS fund or SFS fixed income fund. Because for some mutual funds you can invest and they invest in the bonds for you but the truth is that when you want the money, they give you back the money. So if your time frame is that short, your best bet is a mutual fund. There are many fixed income mutual funds that give you up to 10%, 15% in Nigeria for that time frame. You won't get that in the same accounts, you won't get that in the fixed deposit. So mutual funds like SFS fund are probably your best bet for that type of short term. If it could go longer, I might say land or something else. As we round off from this and discussion now, let's talk about financial advice and a lot of people, they don't really know the right way to go. There are lots of people who come to them and say you can just fix money here you can do some sort of insurance funds and all of that. For instance, I walk up to you, you are an investment expert, you work with SFS and what are the options would you give to me? For instance, I come to you and I tell you that I want to invest as an investment bank and investment expert. What advice would you give me in terms of the right way to go in terms of the right investment plan and of course the ceiling I can go for each particular investment. That is a very very deep question and I can speak about that for ten hours but I will try and summarize it. I think each person should, it depends on where you are someone who has a hundred and someone who needs a hundred to survive will definitely have a different investment plan but someone who has a thousand will need just a hundred to survive. Either way, your investment plan depends on what your mandatory expenditure for the next one or two years. It is always best to diversify do a bit of most of the income streams, do a bit of real estate, do a bit of mutual funds, do a bit of effects do a bit of different things but the truth is that many times we don't have that luxury. If you have a large pool diversify depending on your age if you take more risk if you are younger less risk if you are older so just diversify and do a lot. But if you have not gotten to the point where you have a large cash of fund, aggressively start putting it together by saving in some of the mutual funds and when you are looking for a mutual fund I mean there are a lot of beautiful mutual funds with different organizations in Nigeria just look for a regulated organization maybe regulated by SEC and a rated organization once you find that and the rating now is above A you probably get reasonably good advice so for some reason I discovered that a lot of people these days do not value credit ratings. Credit ratings are very very good sometimes so it is not guaranteed but it is a good indicator that whoever it is has a credit rating has gone through an extensive test by a third party and has come out positive and somebody else is standing beside that rating and saying this guy knows what he is doing. Okay as we round off now I want you to reach out to a particular CEO or a particular entrepreneur who is actually struggling and they have not been able to break beyond a particular boundary as per income level and they are looking for the right way to go because over time they have been working on plowing back their profits but they are thinking of how best they can move from profit margin of around 5 million to maybe 10 million to double my profit in the next 2 to 3 years what would your advice for that person to be showed up? Okay the truth is that for most people the truth is that the best advice is just never quit many people assume that you are working there and instantly everything works out well for most people it never happens like that for most people 99% of the time things look terribly bad and just that 1% you break through so the most important thing is do not quit just keep on keeping on because many times that 1% is just it might just be 24 hours away but you just never know you just never know it's just like when they say that you should know that the truth is that 20% of your time will be wasted and 20% will be productive but many times you don't know which one is you don't know which 80% will be wasted you don't know which 20% so you just have to do the whole 100% but yeah just keep on keeping on and that time will come Alright thank you so much for those insights that you have given I'm sure one or two people would have their business revived from the words of wisdom that you have impacted today Thank you very much Thank you We have been speaking with Patrick He is the managing director and CEO of SFS Capital He joined us today to know character wealth creation and best ways you can do to get the right investment plan As we wrap up on the show today we'll leave you with useful tips on how to write an informal proposal and that's the size of the show for this week I am Justin Akademi See you again next time Bye for now When writing a proposal overwhelms many people but the task does not have to be daunting Even my proposals are written when people need to ask permission to make a purchase undertake a project or write a paper this type of proposal is a way of persuasively putting forth an idea and asking for action to be taken on that idea When writing a proposal consider who will read the proposal and what that person may or may not already know about what you are proposing. Follow these steps when writing a proposal 1. State your proposal Do this clearly and concisely so that the reader knows immediately why you are writing 2. Give some background information Explain why you are proposing your suggestion so that the reader has a better understanding of the problem 3. State a solution to the problem This is where you give specifics 4. Show costs Lay out any costs that will be involved 5. Conclusion Wrap it up by restating the problem and the proposed solution