Two days ago I had a training appointment with a client, so about an
hour to the appointment I called him. Guess what? He suddenly wanted the appointment
shifted to the next day, without prior notice and without calling me.
Again, yesterday I had another appointment with my most valuable
client. Well, due to the illusion of communication between us I met an empty
rendezvous.
Had these happened last year, when I hadn’t taken my Coursera course on
Corporate Finance, I would have felt really bad like I had wasted two days in a
row. But thanks to my knowledge of Corporate Finance theories, especially that
Promised return is hardly Expected return and you have to figure out the
default risk. So, right from the start I knew every arrangement with my client is
the “Promised” and I have to (over time and interactions) determine the “Expected”.
So, I have been expecting a day when one of us will breach his own side of the
agreement, temporarily.
Now that is one simple example of how knowledge of Corporate Finance
concepts helped me in my day-to-day living.
Also, I have been trying to get secondary income sources that have zero
beta relation with my day job and one another. In non-finance terms, getting
secondary income sources that won’t be affected by job loss and issue with any
one of the secondary sources won’t affect the others. And the fact is that I
have even managed to get a secondary income source whose beta is negative in
relation to my day job, if I lose my day job, the income from that source will
soar.
That’s another cool example.
In Nigeria, inflation has been hovering above 11% for years now. And
the risk free rate (rate I’ll get if I invest in Nigeria T-bills) is just above
10%. Meaning without doing any hustling or brain work, I can grow my savings at
10% annualized rate. In 7 years, 1 million saved this year will become 2
million (if the 10% rate stays so throughout those 7 years). And that’s more
profitable than Total Nigeria PLC, Julius Berger PLC, Mobil Nigeria PLC and
Cadbury have been in many years now. And they have several MBAs, expatriates
and industry veterans working there. Heck, I won’t mind working their too.
This just shows that running a biz isn’t as easy and profitable as we
all think. We see the big money splashed here and there by companies, and think
the owners must be minting cash. The truth is, most of those monies were
borrowed cash – from shareholders, retail banks, investment banks and
bondholders. It doesn’t mean that they can double those monies faster than a
street smart guy like me.
Hence, my knowledge of Corporate Finance has helped me make better
money (investment and spending) decisions
In Nigeria, the middle class has been aggressively expanding and lots
of foreign direct investments are pouring in. I believe that my generation will
be Nigeria’s baby boomers – enjoying the post democracy boom. I know that this boom
won’t be forever. I see lots of people who have a single income source (working
for one big multinational) and they go on vacation every year; they know very
little about personal finance, business cycles, retirement plans and life
insurance/annuities. They act very pompous, spot the latest gadgets and change
cars frequently. Sometimes, I wonder if they are not conscious of the fact that
they are that rich just because they are working in that particular coy, which
to me is like putting all your eggs (and your children’s eggs) in one basket.
The very people how will have bank accounts in 3 or 4 banks, just to avoid
being stranded when one bank’s ATM card is non-functional, will not consider
building income sources that will prevent them (and their family) from being
stranded if the company downsizes them or their pay.
For me, armed with ample knowledge of Corporate Finance &
Macroeconomics, I am living a financially well planned life.
Oh no, not again!
I’m experiencing a writer’s block now. I might continue later, but if
you have something wonderful to share, please do.
