Fixed Deposits Or Treasury Bills, Which Is Better?

I have received several emails and calls from my readers asking whether to buy treasury bills or fixed deposits. Whilst, both are very good ways to invest your money there both have similarities and differences, which could work to your advantage depending on your investment preference. Let’s explore some.

Who borrows from you?

When you buy treasury bills you are basically lending money to the government (through the CBN) with a promise to pay back over 91 days, 182 days or 364 days. With Fixed deposit however, you are lending money to a bank or investment house with a promise to repay you at the expiration of the tenor (usually between one to twelve months) If you do not like to lend money to the Government then Fixed deposit is better.

What is the risk?

Treasury Bills are backed by the full faith and credit of the government and as such they are seen as almost risk free because it is very unlikely that a government can go bankrupt and not able to pay its loans. Besides the government has a tax revenue stream it can use to repay its borrowings. I am not aware that the CBN has ever defaulted.

Fixed deposits are backed by the credit rating of the bank. Unlike when you borrow from the bank, the bank does not give you any collateral when it borrows from you. However, it is obligated to pay you your interest and principal when it falls due. The bank can however default when it goes bust as we have seen in years past. When a bank fails, depositors may lose all or part of their money, including fixed depositors.

If you are weary of risk then treasury bills is best for you.

Who gives a better interest rate? 

The higher the risk the higher the reward is how financial markets play and as such one will expect Treasury bill rates to be lower than fixed deposits rates. However, other factors do come into play that makes it change. Currently, Treasury Bills rate post a better rate than average fixed deposit rates in Nigeria despite the latter being the riskier of the two. 

How do I get paid interests?

Some bank pay you interest at the end of the period along with the principal. Some also pay interest upfront depending on what you negotiate. Interests on Treasury Bills are paid upfront only and pays your principal at the end of the tenor.

Which one pays the most taxes?

Treasury bills are exempted from taxes, so taxes are not deducted from your interest payments. However, you are likely to pay a fee to the bank for rendering the service on your behalf. The fees are very small and almost negligible in my opinion. Interests on Fixed deposits attract withholding tax rate of 10% deductible at source by the banks and to be remitted to the relevant tax authority.

If you don’t want to be taxed then Treasury Bills is it. 

Can I roll over my investments (interest and principal)?

Fixed deposits can be rolled over by banks. You simply instruct your bank to roll over the interest and principal when it matures giving you the benefit of compounding interest. It’s also a default way of saving and investing all rolled up in one. Treasury bills can’t be rolled over by default. Once the investment matures the CBN pays the money straight into your bank account.

If you are therefore looking for an investment you can roll over with ease, I suggest you go for Fixed deposits then.

Can I get my cash anytime I want?

You can get your cash anytime you want with Fixed Deposits by liquidating your account ahead of its maturity. All you need to do is to tell your bankers or investment house that you wish to cash in on your deposits. They will however, pay you interest for the period that the money was with them instead of the full tenor if you had waited till maturity. You may also incur an early withdrawal charge.

Treasury Bills on the other hand are not as flexible as fixed deposits. If you wish to cash in on your treasury bills ahead of its scheduled tenor, you will have to sell the rights to the treasury bills to the bank or to a willing buyer. The buyer will deduct the portion of the interest remaining for the period between when you terminated the investment and when it matures from your principal.

So basically, you can collect you cash in both instances except that it is perhaps faster and easier with banks

Can I use it as a collateral

Treasury Bills by their nature can be used as a collateral to collect a loan from a bank. This is because it is seen as a near risk free asset by lenders and is also quasi cash.

Fixed deposits can also be used as a collateral however the credit rating of the bank that is holding the deposits may affect the strength of it in the eye of another lender. Some banks may not accept fixed deposit in another bank as a full collateral because they don’t consider the bank a strong bank.

If you are looking to use your money as cash collateral, then Treasury Bills are more suitable

WHY FATHERS ARE NEGLECTED IN OLD AGE; A Must Read For ALL

Guys and Girls, Ladies and Gents please read carefully

WHY FATHERS ARE NEGLECTED IN OLD AGE.
-ITS A MUST READ FOR ALL FATHERS! (and mothers too!)

Take ur time and read through.

1. In the lifetime of most Nigerian family settings, there are 3 Dispensations of Power.

2. The 1st is the first 25 years in the life of the family (father, mother, children) where power indisputably rest with the father.

3. The 2nd is after the kids have grown & started working when the power shifts to the mother.

4. The 3rd is when the kids move out of the family house or start their own families when the power moves to the children.

6. We'll start from the 1st Dispensation. Total dominance of the father. He is the Lion of the Tribe of his House. The boss.

7. During this dispensation, the father rules with an iron fist. He barks orders & determines what does or does not happen.

8. The father often mettes out corporal punishment to the recalcitrant children. They grow to fear him more than they love him.

10. The father is the provider for the family & everyone is aware of that fact with all attendant consequences.

11. Then the 2nd Dispensation sets in. The children have finished school and have started working. Power shifts to the mother.

12. When the children start earning their own money, for some reason, it's their mothers they decide to look after. They are closer to her.

13. While the father was in charge, he was busy with the business of providing. He didn't have much time to be a friend to the children.

14. They spent more time with their mum and invariably grew closer to her. They also see their mum as co-victims of the father's tyranny.

15. The mother takes centre stage at this point. She is the first to know what's happening with the children & she has advantage.

16. Should any of the daughters give birth, she is the one that goes for babysitting and the children spoil her with gifts.

17. At this stage, the father is wishing for some bond with the children like they have with their mother but that boat has sailed.

18. Because the mother doesn't rely much on the father for her needs at this stage, she is less likely to tolerate his lordship. Friction.

19. Then the 3rd and last dispensation. Power has shifted to the children. They are self-sufficient, live on their own & have own families.

20. More often than not, whenever there is a quarrel between father & mother, the children side the mother.Years of joint-victimhood at play

21. Children have been known to come to the house to warn their father not to 'disturb' their mother. Next thing, extended visitations.

22. Woe betide the father if his finances are precarious at this stage. You will be humble by force. The gang-up is real.

23. This causes most men to fall ill & develop different complications. By the time the forces are arrayed against you, you will think well.

24. Stroke, Hypertension, High-Blood Pressure. The man has a large family but no relationship with them in later life. Troubling thought.

25. Moral, dear men, while the power lies with us, let us wield it with posterity in mind. It won't be with us forever.

26. With the way you are treating your wife now, how will she treat you when power shifts to her?

27. What relationship do you have with your family? Loving dad or despotic, tyrannical provider?

28. Remember, the children always side with their mother. Aim to do enough to at least get a fair hearing in future moments of family strife

30. Invest wisely for the future so that you won't have to beg to be taken care of if despite your best efforts, you find yourself alone.

ADVISE TO CHILDREN:- IT IS NOT GOOD TO ABANDON YOUR FATHER WHO DENIED HIMSELF TO GET YOU PREPARED FOR LIFE & WHO SACRIFICIALLY SOWED TO MAKE YOU WHO YOU ARE. HONOUR YOUR BOTH PARENTS AND TAKE GOOD CARE OF THEM IN THEIR OLD AGE. THAT IS HOW YOU TOO WILL SOW INTO YOUR FUTURE. DONT LET NEGLECTING YOUR FATHER (PARENTS ) BE A CURSE ON YOU INTO YOUR FUTURE.

ADVISE TO MOTHERS :- DON'T INCITE YOUR CHILDREN AGAINST THEIR FATHER.

Parenthood is not easy despite its joys. There is no manual on how it works. May God help us all.

How To Start Online Business With Zero Capital

Having an online business has many advantages over offline business. It offers greater time flexibility, great output for little efforts, can be automated to work in your absence, less expensive to run; unlimited potentials for growth and profit generation. Many people are discovering these facts and are taking advantage of the opportunity. Another interesting thing is that virtually anybody can start an online business. Your academic qualifications do not count. If you can learn and think like any rational human, you can run an online business.

While many people know the immense benefits of starting an online business, they run into a brick of wall whenever they think of starting one. If you desire to start an online business but it seems you can’t wrap your head around where to start, this article is for you. You will learn simple tips to get started. Without much ado, here are the steps below.

1. Decide what type of business you want to run: There are numerous opportunities online that are up for grabs. The first mistake many people make is trying to run two or three at the same time. As a hunter, if you try to hunt two animals at the same time, you will lose both. It is better to focus on one and give it all your energies. You may then try another when you have attained substantial success in the first one. When you set out to search for online businesses, you will find opportunities like Freelancing, Affiliate Marketing, Kindle Direct Publishing, Blogging, Dropshipping etc. You can make a choice from all the options.

2. Investigate the business: It is at this point that you carry out research about what you are about to step into. Most businesses crash quickly due to insufficient information about the business. You need to know the dynamics of the business and how to make profit in it. You need to know how to generate traffic because traffic is king in online business. You need to know how to brand your business in that niche you have chosen. And so on. Don’t make the mistake of thinking that all you need is to start a business and every other thing will fall in place. If you do, everything may fall but not in place; because they will fall to crash.

3. Seek a coach or a group of people doing what you are doing: No matter what you read from books and internet links, it will never substitute for what you can personally glean from someone in the game. A coach or mentor is someone who has achieved a certain kind of success in the business you want to step in to. A group of people who are in the same business can also help too. You will find direct motivation from the successes of others and learn the pitfalls you should avoid. From my perspective, taking this step increases your chances of success by over 50%. Don’t try to be an island. You will only make it difficult for yourself to succeed. Get a coach.

4. Get to work: This is one of the most vital steps. Get to work! Stop thinking about the business. Stop accumulating too much information about it. Instead, make the move and start something immediately. . It will astonish you to know many people stop at this juncture. Nobody ever succeeded by thinking of how pleasant it is to do something. Success comes from doing what you learnt and not thinking about it.

5. Stick to what is working: Most times, it is better to stick to what others have proven to work. The moon that shines in one country is the same moon that shines in another. When you are starting out, it is not time to start experimenting on some principles that are untested. First, you need to gain grounds. So, stick to what has been proven to be effective. You may try other methods if you so desire after you have recorded some successes.

6. Create a work schedule: Working online does not require your presence like 8am-4pm jobs. Once you are done with setting up the business, the business can run with a daily input of two to three hours. You need to create a work schedule that will be convenient for you. Doing this will help you create a routine which will be difficult for you to miss. It will help you be consistent in working daily.

7. Don’t give up: You will face challenges in the course of running the business. The most difficult challenges will come when you just set up the business. Don’t fret; it is natural. You are entering unfamiliar grounds and it is normal for everything to look weird at first. Like a wise man once said. “Everything is first difficult before it becomes easy.” Keep asking questions when you seem lost and be persistent. With time, you will become really good in that niche.

Summary

Don’t let anybody confuse you that there is any difficulty in running an online business. Anyone can run one – even a toddler. If you follow these simple steps, you will have very little issues in running your business. Now that you have read this far, you can decide to make this knowledge useful by taking actions.

How Poor People Can Invest in Real Estate

There are many myths that people have in their minds when it comes to property investment . One of such myths is that you need a lot of cash before you can become a property investor . This belief has robbed several people of the opportunity to enter into the real estate investment arena while waiting for a sudden financial windfall that will launch them into the real estate field. The sad truth is that the more they wait, the harder it seems and the more frustrated many become about the prospect . There is a better way . You can start with the cash that you have.

Cash is important for almost any transaction. However , it is the size and the quantity that most prospective investors do not get right. Knowledge of your options and what you can do with what you have are more important . In addition , you need to set aside all the money you possibly can in order to create a seed capital to work with . You can do this alone or in partnership with other people through mediums such as co-operatives . You can achieve this through mini-savings club that contributes and then distributes to members in turns. The idea is to save as much as you can or pool the funds together to create a fund that provides more options.

Many cooperative societies invest in the acquisition of land for their members and they sell this to members using instalment payment plan. The idea is to make land acquisition easier for members. If you are working in an organisation that has a co-operative society already , you should consider joining . Explore any real estate investment opportunity that they may have. Cooperative societies also lend money at very low -interest rates. You can leverage this to get money that you can invest in real estate . You can then proceed to pay back the interest in instalment .

Furthermore , there are private property developers who make provision for buying off plan or in instalment. Buying off plan is one of the means of acquiring a property without having to fully pay for it because it is in the developmental stage. There is also the option of buying land in instalment. The overall cost of buying a parcel of land using this
model may be higher but it is relatively easier for many to bear because it does not place an immediate burden on the purchaser to pay in full.

Another interesting option for you to consider is to invest with family and friends . While this carries an inherent risk , it also has a lot of possibilities . This reminds me of an incident a retiree shared with me several years ago . A group of four families decided to jointly invest in real estate , picking an area where they could not afford individually . One of them was an architect who came up with a concept of four terrace houses. They broke the project into manageable phases with reasonable financial commitments .Within a few years , they had completed the project . Those who sold theirs made a significant profit and at least one decided to lease out the property and earn an annual income .

Another important consideration for prospective real estate investors is to carefully select a location that is within their financial capacity but has all the indices of a growth area. One of the reasons for value is scarcity . When you consider the price of real estate in the city centres with the amount in several suburbs within a radius of five to 10 kilometres, you may be surprised that there are major differences . If you also consider the demographic projections in those areas , you may be surprised about the positive growth in a few years to come . Keeping this fact in mind should encourage you to look beyond areas that are over your budget and consider other upcoming neighbourhoods .

Many prospective real estate investors have missed very good opportunities because they were fixated on areas beyond their means. You can start small and then grow big which is better than not starting at all . Many areas that have appreciated in the past 10 years were not areas of choice then . You too can research and discover the possible growth areas that are still reasonably priced and within your budget . You can also explore financing methods that allow you to leverage your cash at hand to borrow . Using leverage to acquire an asset is a wise choice. It is a way of increasing the possibilities you can explore using the little cash that you have at present.