First, I joined Institute of Directors and attended the compulsory training for all intending members. In the training class, I had as colleagues MD/CEO of big companies -- Nigerians, Indians, Swedish, British and other nationals. It was a very enriching experience for me, apart from the deep learning I got on how company directors are to carry out their duties. And as excepted, I was the worst dressed. My car was with the mechanic because LASTMA refused me Road Worthiness (the new way to renew the road worthiness certificate is to go for their computerised test which will almost always find something wrong). So I took public transport the first day, then remembered there is Uber. So I took Uber from the venue home the first day, and for the entire second day.

Now you have to take your car here for inspection

That's my car. Was told the brake lights are faulty, one tiny rod under the car is missing and hand-brake needs adjusting as the major faults that caused the road worthiness denial

Here is the verdict room. Excellent people, they called me back that I forgot my phone.

Iod Class. That's me on the ___ (take a guess)

I also continued my back and forth to Republique du Benin. In fact, I am currently there. And I have become a small celebrity. The people at the company I am volunteering for think I know everything. They ask me all types of questions and they always feel amazed by everything I show them. This week I showed them how to extract data from a damaged hard disk using Linux live boot and Linux commands. I also showed them how to connect two computers together using a RJ45 cable, configure the IP address and share files/folders/printers between the computers. They were singing my praises. They are more experienced on hardware and computer repair than networking and programming. So I am more like their God-send. Then today, I decided to gain from them. I asked that they help me clean off the dust I am very sure has greatly settled inside my laptop. And with small fear I watched as they dismantled my laptop. I am glad I asked for the favour because it was no small dust they found inside. Even the fan was full of dust. They gave me special treatment, cleaned every part of my laptop and used a special foam sprayer to clean the exterior making it look new.

Now the laptop looks new and is not always hot like before. I guess the dust was blocking the fan. Happy me.

We had a training class in Asaba last week and my laptop crashed on the night of the day one. It was a terrible thing. I was to continue the class the next day. Luckily, I had a colleague with me and we ended up using one of the participants' laptop. Unfortunately, the problem was a hardware one and not a simple software repair/reinstallation. I had to buy another hard disk. So I bought a 1 Terabyte SSD hard disk for N75,000. 

And that's all that's been going on in my life the last couple of days. Also, I intend to be more strategic with my blog posts since I am no longer following the one post per day rule. I will be making a lot more educational posts.

A bientot!

In september, we had a webinar on Using Microsoft Excel for Investment Planning, Personal Finance & Financial Analysis. Many people loved it and the practical application in their own personal finance and family finances/investment planning. You can still watch the recorded video on YouTube.

Today, however, I have decided to do the written version of it so many more people can benefit from it. You can download the practice along Excel file here.

There are five major formulas you need to have a good grasp of if you want to put some structure and calculations around your financial goals and investment strategy. And they are:

  1. PMT
  2. PV
  3. FV
  4. RATE, and
  5. NPER
PMT is the Excel formula you use to determine how much you need to save regularly (weekly, monthly, yearly) in an interest bearing account to achieve a particular set financial goal (education fund for your children, buy a house, buy a car or be a multi-millionaire). It is also the formula you use to calculate how much you pay back monthly or yearly for a loan that requires you to pay back the same amount (to cover both interest and principal) over the lifetime of the loan.

How it works is very easy. And below are the transcripts of the demonstration in the video and practice file.

a. Want to have N20 million saved in an education fund for your children by 2030 (13 years time).
Question: How much should you contribute in a 15% annual interest bearing savings/investment account?

PMT has five parameters:
  • Rate: The interest rate. And in this sample case, it is the 15% annual interest rate.
  • Nper: The number of periods. In this case, it is the number of years you plan to save for, 13 years.
  • Pv: Present Value. How much you currently have saved in the investment account. In this case, since we are starting from scratch, that would be zero.
  • Fv: Future Value. The final amount you want in the investment account by the end of the specified period. In this case, 20 million Naira. Notice the minus I put in the formula, it's just a technical way of getting Excel to show the answer in a positive value. That's all.
  • Type: Will you be saving at the end of the year or at the start of the year. For end of year, you put 0 or leave it empty, and for at the start of the year, you put 1. The logic applies for other types of period -- weekly, monthly etc.
One very important thing to note is that the rate and number of periods must agree. You can't use annual rate to calculate monthly contributions without first converting that annual rate to monthly rate. You should check out the part in the practice file on monthly contribution for the same goal to get a good grasp of how to convert from annual rate and annual period to monthly rate and monthly period.

b. You bought a 3 bedroom flat for N100 million and were allowed to do 25% down payment while flexible spreading the remainder in a monthly repayment at a 2% monthly rate.
Question: How much will you pay if you spread the payment over 5 years (60 months)?

Try figure this one out and compare your answer with mine. 

In this sample case, PV is the loan amount outstanding. NPER is the duration. Rate is the repayment interest rate. FV is zero since you mustn't owe them anymore at the end of the duration nor pay them excess. And TYPE is at month end repayment (hence, the leaving empty).

PV is for calculating the worth of an investment project after factoring the cost of the capital (loan interest rate, if you borrowed the money from the bank). 

c. You are part of board of directors for a manufacturing company. They are considering a business idea that will cost N300 million and generate N50 million every year into the 9th year.
Question: If the company's cost of capital (discount rate) is 15% what will be the present value of the business idea if executed and is it a profitable one?

Notice how there is all those components of PMT formula in there -- Rate, Nper, Fv and Type. They still mean the same as previously explained. This time, though, we have the periodic inflow/payment from the business project (same as PMT) and want to calculate the present value/worth (PV). If we can be able to service the cost of the capital deployed and still turn a profit (pay back both the interest and capital of the borrowed money to finance the business idea, and still have something left as profit/compensation for all our stress).

Again the minus in the PMT box is to get Excel to display the final answer in a positive figure. Nothing more.

FV is a very interesting and useful financial planning formula. It allows you estimate how much you will have in an interest bearing account if you do consistent periodic (weekly, monthly or yearly) contribution/saving. 

d. You invest/save N40,000 monthly in a 15% interest rate investment account. 
       Question: In 10 years, how much will you have? What about in 30 years?

I don't think I need to explain how this work, based on all my previously explanations you should be able to figure out how it works.

Also notice how the future value stratospherically increase when you save for 30 years as against the 10 years? That is the power of compound interest.

This is useful for those who take microfinance loans or co-operative loans or buy land on installment payment or any loan that you are required to pay specific constant amounts regularly. It would make a lot of sense to calculate what the actual rate of the loan is, since most times they don't provide you the rate.

e. My dad took a 6 months loan of N400,000 from LAPO Microfinance bank. He would be paying back N479,000 split into equal monthly payments.
Question: What is the rate he was given the loan at?

No comment. You go figure out.

This is useful for calculating how long it would take you to finish paying for a car or home if you opt for an installmental payment amount you choose. 

f. Your company has a car loan scheme. You took N4 million loan to buy a car and you are allowed to make monthly repayment at a 2% monthly rate.
Question: How long will it take you to pay off the car loan if you make a monthly payment of N200,000?

No comment. You go figure out.

Don't forget to watch the demonstration video and work along with the practice file.

First, now I realise how much of me is consumed in the daily blog post writing ritual. The absence of the self-imposed obligation has made me free enough to go, unintentionally, several days without writing a single post.

Second, I have a good excuse for not writing for the last six days. I have been practicing French in Republic of Benin just right beside us. I got into an exchange programme courtesy AIESEC to volunteer my IT skills for an small Computer Training school in Porto-Novo. I was also given a host family to help me thoroughly practice/improve my French and make my stay less expensive. It has been a wonderful experience. Both the computer training school and the family hosting me are okay with my impromptu going and coming. Every month, I try to block out some days for the exchange programme without having to close down my business here in Nigeria.

The AIESEC Porto-Novo team welcoming me

Teacher Michael (not easing teaching them in French)

Practical Sessions On Computer Networking
I told you all that the camera was going to be very useful to me.

My post today is on a lifestyle habit I want you to have. One that I use to counter my biggest fear. And what is that fear? 

Interestingly, it is not money related. Somehow, I have always had this inexplicable assurance in my mind that I will be very rich or at least not have money problems. Even when I had no logical proof and the current situation wasn't helping matters. Maybe it is because I have been through deep poverty and significant abundance growing up, and it has made me realise first hand that much more than the money itself is one's ability to be resourceful and contented. And also that if you work hard and smart, you'll have more than enough (God sparing you any expensive accidents/sickness). 

So what is that fear I consider my biggest?

It is the fear of being like many old people I see daily who can't even operate their own phones maximally. They have problems with using the internet and computers on a very serious level. I dread being like that in the future. It is like dying before actually dying. Being out of touch with modern technologies and new important skills. I want to be as mentally active as I am today, even much more if possible, in my old age. I want to stay sharp, hard skills-wise, and well tuned to whatever the modern technology of those days will be.

To ensure this, I have made a habit of always learning something very difficult. At every point since my graduating university, I am always having some difficult thing or skill I am working on. Every year that passes, I can always point at one very difficult thing I progressed at and I try to move to a new difficult thing every few years.

This habit forces me to have a very open and absorbent mind. Rather than become the always judging guy whose favorite pastime is contrasting today with the not so long ago past and loves saying "how things have changed", I try to be the guy with more memories of today than yesterday. I want to live fully in today's opportunities and potentials. I want to keep learning everything, though one after the other, that I have always wished I knew. From French language to Programming and Magic. Yes, magic. I have a book on magic tricks and I read it. It teaches the tricks you see people do with coins and cards and other common stuff on TV.

I also embrace the fact that my learning speed might be slower due to my age and the numerous distractions. I am conscious to not let my slow progress discourage me or make me totally belittle what I am learning to the extent of quitting.

And you? Are you always learning something very difficult?