Ability to Take Risk

This is your financial capacity to take risks. It depends on factors such as your income, savings, financial obligations, and investment time horizon. For example, higher income and substantial savings can increase your ability to take risks, high debt levels or significant financial responsibilities (like supporting a family) can reduce your ability to take risks, the longer your investment time frame, the more risk you can typically afford to take, as you have more time to recover from potential losses.

Balancing Willingness and Ability

Effective financial planning involves balancing your willingness and ability to take risks. Here are a few steps to consider: Assess Your Risk Tolerance, Evaluate Your Financial Situation, Diversify Your Investments and Adjust Over Time. Understanding your willingness and ability to take risks helps you make informed investment decisions that align with your financial goals and comfort level.

• Liquidity Needs

This refers to how quickly and easily an asset can be converted into cash without significantly affecting its value. Liquidity need is the requirement to have access to cash or easily convertible assets to meet short-term financial obligations or unexpected expenses. While liquid assets offer safety and flexibility, they typically yield lower returns compared to less liquid investments. Balancing your portfolio to meet both liquidity needs, and long-term growth goals is essential. Understanding your liquidity needs ensures you have the right mix of assets to meet both immediate and future financial goals.

• The investment duration

This directly influences the investment objective. In essence, the longer the investment horizon, the greater the potential for risk and reward. However, it’s crucial to align the investment duration with the investment objective to achieve financial goals effectively.

Short-term objectives: Investors typically seek investments that offer liquidity and stability. Examples include money market funds, certificates of deposit (CDs), and short-term government bonds.

Medium-term objectives: These investors often balance growth and income. They may consider a mix of stocks, bonds, and mutual funds.

Long-term objectives: Investors with a long-term horizon can tolerate higher risk for potentially higher returns. They may invest in stocks, real estate, and other growth-oriented assets.

Example: A young investor aiming to accumulate wealth for retirement (long-term objective) might invest in stocks, which historically offer higher returns over the long run while an investor nearing retirement seeking steady income (short-term objective) might prefer bonds and dividend-paying stocks.

1. Understanding Various Investment Vehicle

An investment vehicle is a financial product or account that allows individuals and institutional investors to invest their money with the aim of generating profit or returns. These vehicles come in various forms, each carrying its own risks and rewards. The best investment vehicle for you will depend on your individual circumstances and financial goals. Consulting with a financial advisor can help you make informed decisions. Here are some of the most popular investment vehicles:

• Stocks: A type of investment that gives you partial ownership of a publicly traded company. Such ownership entitles you to any dividends that may be paid, and you may experience gains or losses on your holdings over time. Potential for high returns but higher risk. E.g. shares of FBN holdings.
• Bonds: A debt instrument, a bond is essentially a loan that you are giving to a governmental entity or a company in exchange for a pre-set interest rate. Typically, the bond pays periodic interest (coupon payments) during its term, and it matures on a specific date. Steady income but moderate risk. 
• Mutual Funds: An investment vehicle that allows you to invest your money in a professionally managed portfolio of assets that, depending on the specific fund, could contain a variety of stocks, bonds, or other investments. E.g. FBN Money Market Fund.
• Exchange-Traded Funds (ETFs): Like mutual funds but traded on stock exchanges, offering more flexibility and potentially lower costs.  
• Real Estate: Investing in physical property, such as houses, apartments, or commercial buildings.  
• Derivatives: Financial contracts based on an underlying asset (e.g., options, futures). This is also a high-risk investment. 
• Commodities: Physical assets like gold, oil, or agricultural products.  

Other consideration when choosing an investment vehicle

• Diversification benefit                                 Fees and expenses Reputation of the Financial Advisor

2. Stay Informed & Continuous learning (A way to take ownership of your finances)

Certainly, improving your financial literacy is a valuable endeavour that can empower you to make informed decisions and better manage your personal finances. Remember, continuous learning is key to improving your financial literacy. Here are some effective ways to enhance your financial knowledge:

• Read Books and Magazines                                                               Visit Financial Websites
• Attend Local Presentations/Webinar                                              Seek Expert Advice

Common Investment Mistakes

Here we highlight the past mistakes people have made while making an investment decision. The aim is to prevent us from doing same and better equip ourselves to make better investment decisions. Investing is a journey, and learning from missteps can lead to better outcomes.

• Not setting financial goals                                                     Not diversifying                               
• Not learning from your mistakes                                                Not doing your research

In conclusion, monitoring and reassessment are crucial components of successful personal finance management. It is not just enough to execute the actions above; it is important to imbibe the culture of discipline to achieve your financial objectives.

Remember, the journey to financial well-being is a marathon, not a sprint. Stay committed, stay informed, and your future self will thank you.

The Alternative Bank, Nigeria’s newest entrant into the financial services sector, launched in spectacular fashion by holding simultaneous launch events in three major cities across the country – Lagos, Abuja, and Kano, making it the first synchronized multi-city brand launch in Nigeria’s history. The Alternative Bank is the ethical banking subsidiary of Sterling Financial Holdings.
Speaking from Lagos, Managing Director of The Alternative Bank, Hassan Yusuf, said, “We believe that banking should be a platform for shared prosperity, where everyone benefits. And this explains why we refer to our customers as partners, because we believe we are on a journey of wealth creation where profits are shared, and customers are provided with funds without incurring interest charges.”
Speaking at the launch event in Abuja, Executive Director of The Alternative Bank, Garba Mohammed, said “The Alternative Bank is here to create wealth-for-all in a sustainable way, by doing things differently and taking a different model to partnering with its customers.”
The launch events featured the presentation of digital products to attendees, designed to bring more people into the formal financial sector with an albeit unconventional approach to e-commerce, investments, assets financing, and renewable energy with solutions such as AltMall for e-commerce, AltInvest for ethical retail investments, AltPower for affordable renewable energy solutions, AltDrive for new and pre-owned vehicle financing, and WasteBanc for the monetization recyclable waste.
In recognition of the unique financial needs of individuals and businesses, The Alternative Bank offers personalized financial consultations, tailored solutions, and one-on-one guidance towards ensuring that customers achieve their financial goals. The zero-interest banking principle is dedicated to fostering sustainable practices, responsible investments and financial decisions that contribute to positive social and environmental impacts.
The Alternative Bank also recently launched an innovation in retail investments with the first AltCoin which affords investors the opportunity to preserve and grow their wealth by investing in gold.
The Alternative Bank started in 2014 as Sterling Alternative Finance, after the Central Bank of Nigeria licensed then Sterling Bank Plc to operate a non-interest banking business and has since grown to become one of the largest ethical banks in Nigeria’s non-interest banking sector.
With the recent completion of Sterling’s transition to a full-fledged financial holdings company, The Alternative Bank will operate as the non-interest banking subsidiary of the Group, while Sterling Bank Limited will continue to provide conventional banking services.

Africa’s Global Bank, United Bank for Africa (UBA) Plc, is set to organise another edition of the UBA Business Series. This is in line with the bank’s commitment to support the growth of micro, small, and medium-scale enterprises by equipping them with the requisite tools to strengthen and sustain their businesses.

The UBA Business Series is a regular seminar/workshop organised by the bank as one of its capacity-building initiatives, where leading business leaders and professionals share well-researched insights on relevant topics and best practices for running successful businesses, especially in the face of difficult business challenges.

This edition, which is powered by the UBA Value Chain Banking, will look at the topic ‘Personal Finance: Wealth Management in Today’s Economy’ and is specifically targeted at key distributors and small and medium-sized business owners. It will be held on Thursday, October 12, 2023, from 12 p.m. at the Tony Elumelu Amphitheatre, UBA House, Marina, Lagos, whilst online participants can also access the session on Zoom via https://bit.ly/UBABIZSERIES

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The CEO and Executive Editor, of Frontier Africa Reports and eminent television host, Boason Omofaye; Managing Director/CEO, of United Capital Asset Management Plc, Odiri Oginni CFA and Recording Artist and CEO/Founder of Mova Networks, Akitoye ‘Ajebutter22’ Balogun, will be on the ground to give helpful tips on wealth management in today’s economy to business leaders. They will also provide guides on the best ways to take businesses to the next level in challenging economic terrain.

UBA’s Head, SME Banking, Babatunde Ajayi said:

“The vast knowledge and experience of the panellists, will help business owners understand the importance of personal finance, wealth management, and most importantly how to navigate the frailties of the harsh economy to ensure business growth.”

“We know small businesses are the backbone of the economy in every country that is why at UBA, we constantly look for ways of ensuring that these business owners and operators are well-equipped to grow their businesses successfully.”

Recently, UBA announced an initiative aimed at providing robust and comprehensive financing solutions to support and boost the activities of SMEs across the African continent, where SMEs will have the opportunity to access financing in the key sectors of Agro-processing, Pharmaceuticals, Automotive, and Transport and Logistics.

The financing initiative is powered by UBA’s recent partnership with the African Continental Free Trade Area (AfCFTA) secretariat to provide financing for up to $6 billion over the next three years to eligible SMEs across Africa, an agreement which was signed on the sidelines of the 30th Afreximbank Annual Meeting (AAM) which was held in Accra, Ghana earlier in the year.

UBA is a leading pan-African financial institution, offering banking services to more than thirty-seven million customers across 1,000 business offices and customer touch points in 20 African countries.

With a presence in New York, London, Paris, the Cayman Islands, and now the UAE, UBA is connecting people and businesses across Africa through retail, commercial, and corporate banking, innovative cross-border payments and remittances, trade finance, and ancillary banking services.