Monday, 16 November 2009

How to leverage your money

(Biz tool Kids)
IN an inflationary economy such as this with deepening economic crisis, without leverage, most workers cannot put enough money aside for their future because the more money they save, the less valuable it becomes. Leveraging makes your money work harder for you by using other people’s money. But one advice from my mentor: never borrow to buy an asset you don’t have control over.
If an investor therefore lacks the financial intelligence to control an investment, the use of leverage becomes risky and even suicidal.
This is the major flaw with paper assets such as savings, stocks, bonds, mutual funds and index funds, where the investor lacks control. And because you lack control, it is difficult and risky to apply leverage.
Like Robert admits, using leverage to invest in something you do not control would be like buying a car without a steering wheel and then stomping on the accelerator.
Most people that were hurt during the recent stock market meltdown in Nigeria thought their investments in stocks would keep going up and up.
Many borrowed thousands and millions to acquire more stocks in the hope of selling at a higher price and making some capital gain from it, while some even borrowed using their existing portfolio as collateral. Since they had no control over the investment, they were at the mercy of the market.
When the market came tumbling, their investments came tumbling too. Their investments (and calculated net worth) melted like butter in the sun.
What is leverage? In simple terms, leverage is doing more with less. I will be looking at this from the following perspectives.

Leverage could mean Other People’s Money (OPM). My advice is, if you have to borrow, or use bank’s money to carry out your project, you need to mind two things: You need to have control over the business or project. You need to have done your due diligence on the project before asking for any form of financing.

Leverage could mean Other People’s Knowledge and Skill (OPKS). When Microsoft, now the world’s leading software manufacturer started business, Bill Gates and his partner Paul Allen were just techies. They lacked managerial skills and competence needed to manoeuvre the business. They had to invite Steve Ballmer, a Harvard MBA product and Microsoft’s current CEO, to come on board to steer the management of the company while they focused on writing software programmes. Steve Ballmer’s inclusion on board changed and skyrocketed the fame and fortunes of the company. They couldn’t pay him at the time; so they settled for stock options with him. Ballmer’s shareholding in Microsoft today makes him a multi-billionaire. Leverage may come to you as the knowledge, skills or abilities (KSA) that somebody can contribute to your business or project.

Leverage could mean Other People’s Credibility (OPC). There are few Nigerians whose uncommon and very successful achievements have made them the toast of board selections in many blue-chip companies in the country. Chief Gamaliel Onosode, Dr. Christopher Kolade and Professor Pat Utomi, Alhaji Aliko Dangote, inter alia, are among this rare class of Nigerians. Imagine floating a business and getting one of these men on board as chairman, the Nigerian corporate environment will respond positively to your business. But you have to make sure you don’t tarnish the image and reputation of such people which they’ve built over the years.

Leverage could mean Other People’s Assets (OPA). Sometimes, people have started businesses by leveraging on the assets provided by certain individuals to them. I know a business that the first car the company had was provided by a shareholder as his own contribution to the business. Another individual provided a completed building as his own contribution to a group of people who were starting a microfinance bank.

Leverage could also mean Other People’s Contacts or Network (OPCN). In this case, somebody might provide you contacts that can help you secure a contract, implement a project or get financing for a project. This also could be a form of leveraging.
In other words, leveraging does not only connote money. It could also involve or require some other intangible but very important assets.
As a business person, you may not need money for a project, all you may require is someone’s credibility, contacts or knowledge to achieve your laid-down objectives. When you identify the form of leverage you need, then identify those who can likely provide it and find out what you might need to provide to secure that leverage.

Olotu is the CEO/Lead Consultant, DEAIM Innovative Resources Ltd,

O what a weekend!
(Strictly for the yoUNG)
LAST weekend was one of those weekends. I guess one could call it the weekend of money, money, money, and all that jazz!
First off was Friday!
The promotion had been going on for a while now, and no matter what everyone thought deep down, we all dutifully sent in our texts with our names and location. But only one person could win $1 million. And like I always like to repeat and clarify; not naira oh, but dollars!
The winner?
Kizito Egeonu, a 400 level student of Medicine at University of Jos! On Thursday, he probably had some thousands of naira in his account, and by Saturday, well, after fainting of course, he was N150 million richer!
It got quite a bit of us thinking. First was lucky dude! Or ‘I hate him’! But after all of that, our thoughts all went to the money and what we would do if we had won it! And try as I might, I still have not been able to map out what I would do with an amount like that!
Is it not funny how we sometimes sit and say we want to do this and that and build this and go here and see there?
And we just know that all we need is the money and we would fly. Then sometimes, we get all we wished for in our laps but then realise we have no clue where to fly to? Err... It is important to think before the opportunities come oh, so that by the time they come...
In the meantime, if Kizito is wondering what to do with the money?
Well, he can buy three BussCars and start a cross country business. He can buy breakfast lunch and dinner for all his schoolmates for four years. Or buy my favourite drink for everyone in Nigeria. I think he should just please remember that we both s.h.a.r.e Adam as a forefather. He should therefore see me as a cousin and write me a cheque!

THAT was just one half of the fantastic Friday!
The other half, which made it really complete and totally beautiful, was the Muson Jazz Festival.
Festival held on Friday and Saturday and featured artistes like Bright Gain, Beautiful Nubia, and Mfon. Dan Foster hosted it, and yours truly co-hosted!
Now, I love music. But I probably would reach for a rock album before a jazz album. Well, that was until I saw Jimmy Dludlu perform live at Muson Centre!
If you ever get the opportunity to see Beautiful Nubia, Pure and Simple, Bright Gain, 5 YZ Men, Mfon, Biodun Batik and indeed Jimmy Dludlu perform live, seize the opportunity! For they will deliver to you, live music like never before. It was a truly inspiring and borderline spiritual experience! New acts like JD, Kafayat and Q, were also showcased on Friday Night!
In all, it was a peaceful weekend, spent rejoicing for a total stranger, and hanging out with some of the biggest names in alternative music.

What more could one ask for?
(Well, maybe MY name should have popped up during that draw jo!)


  1. you have a nice site.thanks for sharing this valuable resources. keep it up. you can also earn money from here

  2. I like the way of explaining about leveraging. Thanx for sharing it with us.

  3. great stuff...!!!

    my name is ojijo, a lawyer & guest lecturer (speacilising in legal rhetoric and ict law); a performance poet; socialist political party member; author of 21 books; believer in open religion; expert public speaker and trainer on financial literacy and personal branding; and volunteer financial literacy traine (travola), and i believe in has made me achieve my dreams...and i apply it in four areas of skills, time, effort and money...STEM...