Finance

  This article first appeared here . Which  should be the priority in uncertain economic times? Retirement savings  or emergency fund? When you’re nearing your retirement and you’re  working and living on a tight budget in  uncertain economic times, when future economic environment is unpredictable, it’s always going to be difficult to know which to prioritize between retirement savings and  emergency fund . The reality of life is, both are necessary. It is necessary to set aside a stash of money to take care of income and  spending upsets. No one prays for a job loss but it can’t be ruled out in uncertain economic times. And in life, no one prays for unwanted expenses like a medical emergency, but it still happens. So, an emergency fund is necessary.  The regular contribution to  retirement savings is also necessary.  Why is it necessary?  70 years is the age of retirement from active service.  You’re expected to bow out of ac...

  There's no one magic wand. Business survival and success depend on managing a combination of factors successfully.  Pause! This combination must be driven by a clearly thought out selling point matched by a singularity of focus. This selling point, a summary of  the primary reason customers should choose you to do business with instead of competition, is the driver of business survival and success  After you have clearly defined your selling point, shift your focus to situate it with needs and expectations of your target market, investors, suppliers and the public.  While at it, don't forget to be flexible and adaptable to changes. Don't also forget that the customer is king. Therefore, customer satisfaction should be regarded as a very important consideration for the sake of business survival and success.  Another point to keep in mind is that business success takes time. At the early stages of the business, expect expenses to exceed revenue. But with ti...

  Businesses associated with constantly rising share prices and a corresponding constantly rising dividend payouts are  attractive to dividend stock investors. This is because, investors are confident that these businesses have managements that set and achieve progressively increasing total sales revenue and declining total costs.  The result, progressively rising profits for appropriation as retained profits, dividend payouts and reinvestment for growth and expansion purposes. Now, which dividend stocks will continue to grow over the next 5 years? No one can accurately predict future share prices. Share prices are influenced by speculators' often irrational decisions.  However, as an investor, you can make near accurate predictions by picking and investing in a portfolio of at least, 15 financially strong and stable high dividend paying businesses. Such businesses can be selected from the "New York Stock Exchange’s 106 Best High Dividend Stocks - Analyzed and Scored...

  Every business set up for the purpose of making profit is primarily interested in reaching and maintaining a high level of performance where revenue exceeds expenses.  It measures its performance in terms of of the price of its shares, dividends and number of issued shares. A business's dividend policy including the stability of the policy, is tied to the business's earned profits, cash flows, prospects of growth and the preferences of shareholders or investors. Shareholders or investors considering investment options would assess dividend policies and results of shareholder or investor ratios (especially the price earnings ratio) of available businesses before making an investment decision.. The dividend policy indicates the proportion of earned profits a business is willing to pay out and the regularity at which dividends are paid out.  Now note, when a company is not making stable profits, their shares will not yield regular dividends.  What is the price earning...

  Do you have a plan for your future? The answer is most likely a quick YES! Does that plan include a financial plan (a budget to control your spending, saving and dictate your invesments)? The answer more likely a NO!  Many make plans for the future without including a financial plan in them. Why do they ignore this all important map and means to get to their goals? It's most probably because they don't have a financial literacy.  What is financial literacy? Financial literacy is the acquisition of at least,  a basic financial knowledge that helps you to know how to fill your needs, spend responsibly and still set aside (save) a portion of your income for the future.  Why is it important to save a portion of your income? So that you can have a significant portion of capital that may be required to invest, grow and secure a lifetime financial stability Also for the sake of the protection of your investments (and your entire personal finance) against future risks...

What are marketable securities as a short term investment option? First, what are marketable securities? Many businesses prefer to invest most of their liquid resources in marketable resources instead of keeping them in idle cash. Businesses prefer holding a greater portion of their liquid resources in this form, because marketable securities can be easily and quickly bought or sold (they are highly liquid, that is, easily converted into cash) at quoted market prices daily, on securities exchanges.     Marketable securities consist basically of bonds and common stock of publicly owned companies. Investments in marketable securities yield returns in the form of interest and dividends.  When marketable securities are bought, how is the purchase price calculated? ABC Company makes a short term investment by buying 10,000 shares of the common stock of XYC Company at $0.35 per share. ABC also pays a brokerage commission of $500. The purchase price is $4,000 (10,000 x $0.3...

  What Is Inflation? Inflation reduces the purchasing power of money (purchasing power, the quantity of goods bought by an amount of money).  Inflation reduces the purchasing power of money in a growing economy by triggering rising prices of consumer goods and services. `A slow and steady rising of prices caused by an inflation rate of at about 2% is okay. But when the rate rises faster, sometimes to double digits, then it can have a negative impact on personal financial management. For instance, as a consumer, you would be time consuming to compare and determine best prices to get goods and services at a given moment. How is inflation measured? Inflation is measured by using the Consumer Price Index (CPI) and the Personal Consumption Expenditures (PCI) tools.  The Consumer Price Index tracks prices for individual goods and services which households are buying.  The Personal Consumption Expenditures, PCE, tracks changes in prices of consumer goods and services which ...

 First, what is cash flow> Cash flow is defined as an increase or decrease in an amount of cash. And what is cash? Cash is defined as ‘cash held  in hand’ and any deposits repayable on demand with banks and any other qualifying financial institution, less overdrafts from a bank and any qualifying institution, repayable on demand.  What then is the difference between break- even analysis and payback period on the basis of cash flow? The term break-even analysis as commonly used, does not capture the true meaning of the interrelationships it explores. Break-even analysis is not only concerned with the level of activity which produces the break-even point (where neither profit nor loss is produced). It is more concerned with how costs and profits behave at other levels. This is why the alternative term. Cost-volume-profit (c-v-p) is often used.  Break-even analysis or c-v-p analysis is relied upon for short term planning and decision making. It uses principles of mar...

House (asset) rich, cash poor is a product of you putting most of your wealth (equity) in real estate that's difficult to convert into cash.  Investing in real estate is a good financial decision but it may constitute a problem if you don't have sufficient liquid cash in the pocket and bank to maintain your lifestyle and, pay short term debts as they mature. Being house rich, cash poor is an uncomfortable position where the struggle to hold onto real estate would cause you to keep on postponing, enjoying the benefits of being a homeowner. To solve this problem, you striking a balance between your real estate asset and your liquid assets (top among them is cash) is necessary. This stability would translate into having sufficient funds in your savings or checking accounts to settle current liabilities as they fall due. Apart from cash, other highly liquid assets are stocks and bonds, but it's more complicated to convert them into cash.

  Why should you be bothered about nterest rates? "Interest rates are to asset prices what gravity is to the apple. When there are low interest rates, there is a very low gravitational pull on asset prices." - Warren Buffett. Prices of assets, cost of borrowing and rewards for savings are tied to the rise, fall and stability of interest rates. Interest rate for borrowing (cost of borrowing) is the percentage of the loan amount. The higher this percentage is, the more the interest to be paid back in addition to the principal.. At lower interest rates, borrowing to buy big assets is more attractive than borrowing to aave.  At lower savings rate, a percentage of savings paid into a savings account is less than at higher savings rate. So, it makes more sense to borrow to spend and buy assets rather than borrow to save and be rewarded with low interests. At lower interest rates, spenders pay less interest and have more money to increase their spendings on consumer goods. This lead...

  These reasons are, to have the time to learn the true meaning of life and enjoy its beautiful gifts, found in abundance outside the work environment. Have you forgotten that life's pleasant and exciting surprises, are presented to travellers? Surprises and nature's strange things told and found in books seem fictitious until they're lived and experienced. So, go ahead, take a career break and find out what life is all about. Another reason is, so that life will not leave you behind. Life leaves behind the redundant.  It's an ever changing dynamic world out there. Acquiring a new set of skills keeps you ahead of the game. A new set of skills can hardly be acquired without taking a career break. "Work is a rubber ball." Gary Keller observed and continued, "If you drop it, it will bounce back. The other four balls- family, health, friends, integrity- are made of glass." Your family is a glass ball, if you drop it, it could be irrovocably  shattered.  ...

"Returns matter a lot. It's our capital." — Abigail Johnson The accumulation of wealth from investments in stocks is determined by the long run rate of return on investments. Many investors find companies that pay regular and increasing dividends attractive.  Investors believe that a company with a history of strong dividend growth are on the path of long term profitability and that, part of their profits, would consistently be appropriated to grow their dividend. However, what is the primary input of the stock valuation method, investors in dividend growth stocks use to determine the best stocks to invest in? It's the dividend growth rate. What is the dividend growth rate?  The dividend growth rate is the percentage rate of growth that a company's stock's dividend experineces within a given period of time. It's calculated annually. Examples of companies with dividend growth stocks for the month of February, 2023. - fool.com

? Thorough project management knowledge, skills and techniques are necessary for the successful execution of a project from iniatiation to closing.  One of the tools for a successful  project execution is an effective project cost management.knowledge. Project Cost Management includes necessary techniques or processes for the completion of projects within approved budget. These processes are estimation of costs, determination of budget and control of costs. 1. Estimation of costs - The establishment of monetary resources required to successfully complete a project is crucial. Some of the techniques used to estimate costs include  a. parametric estimating - the parametric cost estimates are calculated by using the relationship between historical data and other variables such as cost, budget and duration. b. reserve analysis - cost estimates sometimes include reserve analysis- this analysis is relevant to cost estimates that contain cost uncertainty.  The uncertainty i...

Recently, job cut has become a constant reality. The reason is, many economies are frequently in and out of depression. Businesses would always do all they could to push total revenue above total costs. If sustained profitability is the oxygen of every successful business, cutting costs would always be applied to avoid suffocation. Job cut is most busineeses'  primary cost cutting tool. What this means is, right now, someone has just lost a job or is about to lose a job for no fault of theirs. But...that wouldn't be the end of life. There's life after a job loss. A weak economy could recover quickly, grow rapidly and give businesses opportunities to hire again. But one would have to be alive, sound and prepared when the next employment opportunity shows up.   This post gives useful tips on how to prepare for a job loss and survive a layoff. 1. Invest in continuous learning. Don't stop learning after you've secured your dream job. Having a dream job is not the same a...

 Argentina and Brazil are set to begin preparatory work to establish the second largest currency bloc in the world. The name suggested for the new currency is "sur".  The "sur" when it officially becomes a medium of exchange in the two largest latin American economies, would facilitate comparisons of prices and other key investment decision parameters.  What else should investors expect? A look at lessons from "euro", the largest currency union would be helpful. The euro eliminates currency risk within the eurozone. It facilitates and promotes cross border invesments by businesses. Businesses operating in both Argentina and Brazil would no longer face currency risks if and when sur becomes a daily currency in both countries. Elimination of currency risks and facilitation of price comparison would enable cross border businesses in the two countries to lower costs and increase profits. How? Businesses would have a range of best deals from suppliers to choose...

Every budget is a test of your capability to balance your expenses and your income. It's a tough test that many of us fail. The reason is simple, most of us are never prepared to live within our means. Most of us when we have a little, we want to prove to those who don't really care about us that we have arrived  and when we're sent packing from the heaven the people built for us, we go outside our means to buy mansions in the hottest part of hell in attempt to prove to the world that we are still in heaven. Who really cares about where you're , what you have and how you are at any time of your life? Maybe your loved ones, outside them you're alone. So, if you want to balance your budget and achieve financial freedom, you've to die to what people think of your lifestyle, how they live without fiscal discipline and live within your means.

What's the primary job of every entrepreneur? Take profitable risks, do everything legitimate to at least preserve capital when profit can't be made. This job wouldn't be done when a business survives the volatile early stage, breaks even, enjoys profitability for few years and then goes bankrupt as a result of venturing into risky ventures. The going concern concept would be defeated.  So, what long term business survival options do some entrepreneurs pick to preserve their assets when they go into volatile ventures? One of them is the Special Purpose Vehicle (SPV) also known as Spechial Vehicle Entity (SPE). A special purpose vehicle or special purpose entity is defined as a subsidiary created by a parent company for a special purpose. The special purpose most often, is to isolate a parent company from financial risk by providing securitization of assets  The above is made possible by the fact that SPV has Its legal status as a separate company. This status makes its obli...

A worker is likely to gain experience, become more efficient and faster as they carry out a repeated performance of a job task. Human beings improve skills, gain experience, exposure and specialize as they repeat the performance of a particular task. This is known as the learning curve effect. A worker with the no previous experience and knowledge is untried the first time they perform a new operation. As the worker repeats the operation and becomes more familiar with it, their labor efficiency increases and their labor cost per unit decreases. After the passage of time, the regular rate of decline in cost per unit is established and used as a basis to predict future labor cost.. The learning process begins at the point the first unit comes off from the production line. And each time cumulative production is doubled, the average taken to produce a unit of cumulative production is a percentage of the average time of the previous cumulative production. What is the learning curve theory? ...

  Currency redesign by the Central Bank of Nigeria and its complementary withdrawal limits have come to stay. The recent news from the Central Bank of Nigeria (CBN) is an indication of the near irreversibility of the policy implementation. The news claimed that volume of currency in circulation, not in vaults of banks has dropped by at least 5 percent in just one month. So withdrawal limits are going to be enforced to the letter but Nigerians may not have the luxury of time (Senate is urging CBN to set June 30, 2023 as the new deadline).  In the event of no deadline extension beyond January 31st, 2023, how're Nigerians going to make urgent purchases above weekly withdrawal limits? Or even make long term arrangements? Financial transactions are often done on two bases, cash and credit. In many economies, where individuals take their creditworthiness serious, most financial transactions are done on credit basis. In Nigeria, it's mostly on cash basis and soon, this is no longer g...