MONEY: The Inseparable Quadruplets & Muhimbise’s Take!
Money and Sex are the TWO hardest topics
to discuss in recent mankind history, depending on how these two are managed in
any individual’s life- there will be determined a PERSON’s success or challenges
throughout their lifetime- It is therefore worthwhile to interface with these
two topics: early, frankly and honestly- It beats me as to why they are not
thoroughly taught in the school education system...
Today our topic dwells on the one half; MONEY
And the comprehensive presentation below
is meant to tickle your thoughts on money for the better
What is MONEY?
Money is any object or record that is
generally accepted as payment for goods and services and repayment of debt in a
country.
Other names of MONEY: cash, currency,
change, wealth, capital, funds, riches.
History of Money- The Evolution
In the beginning more than 100,000 years
there was gift economics and debt based on trust, then Barter trade was between
either complete strangers or potential enemies (ones who might not have
honoured their debt).
As trust declined and commerce took
centre stage, Societies later developed the use of commodity money; In Africa with
the Arab traders we adopted the use of shell money- cowry shells; around
650-600BC in came gold and silver coins.
Commodity money was so popular since it
attracted less risk and later evolved into Representative money, here gold and
silver merchants or Banks would issue receipts to their depositors- redeemable
for commodity money deposited.
After World War II- with the replacement
of the Great Britain as world super power by the USA- at the Bretton Woods
Conference (Where today’s World Bank, IMF
were created) most countries adopted currencies fixed to the United States
Dollar, the US Dollar was in turn fixed to Gold.
In 1971 the US government suspended the
convertibility of the US Dollar to Gold, after then most countries unplugged
from being fixed to the US dollar- That US decision ushered in FIAT money which
is still the world order to-date.
In Uganda the Uganda Shilling is not
backed by anything save for government issuing it as Legal tender and its
ability to convert money into goods and services via payment.
Uganda’s Money Evolution
Uganda’s money history dates back to
time immemorial when in the Chwezi dynasty, headquartered then at present day Bunyoro- Lake Albert area (Oil!), practiced the exchange of Salt and iron mainly for other commodities
that is BARTER TRADE.
When the Chwezi empire, believed to be origin of all Royal
families in Uganda- Eastern Congo and Karagwe (Northern Tanzania area just below
lake Victoria), collapsed trade continued as usual and
the Buganda and Bunyoro Kitara Kingdoms stood out as very organized commercial
zones doing barter trade in the commodities of: Salt, Iron (for spears and hoes/jjembe),
Ivory and rhino horns
Around the period 1700-1800 the Arabs
traders’ who came by dhow on the Indian Ocean mainly traded simple goods like
cloth, mirrors and complex ones like guns for slaves, raw material and ivory
they were later to convert to cowry shells as a medium of exchange
In the mid 1800 came the Christian
missionaries (Catholic and Anglo), with that turning Uganda into a
British/Anglo Protectorate we adopted use of the British pound and a semblance
British Financial system rules and regulations.
At the onset of building of the
Mombasa-Kampala Railway the British Colonialists brought in expert labour to
build the railway and those were Indian coolies- they were later to settle and
even invite their relations to par take in the virgin economy that was Africa;
people like the Madhivanis operated a shop or dhukawala around that time- The
Asians were to be given preferential status notably in economics over the
indigenous Ugandan by the Colonial power- this could have planted the seeds for
Uganda’s 1970’s economy short circuit
Anyhow
in the years leading to Independence in 1962 our own currency, just like the
Uganda flag and National Anthem, the Uganda Shilling was born, it’s worth
noting that most of early currency had pictures of the President in power the
reason when there was a change in government the Currency followed i.e. Obote I
to Amin to Obote II and to Current
The Bank of Uganda (BoU) as we know of
it today was created on the 15th of August 1966, it is owned 100% by
the Government of Uganda but it is not a government department, BoU conducts
all its activities in close association with the Ministry of Finance, Planning
and Economic Development and its Vision is: To foster price stability and a
sound financial system.
BoU is responsible for monetary policy
and maintaining price stability
Other Salient Milestones in Uganda’s
Monetary evolution
1968- Nakivubo pronouncement, ‘The Common
Man’s Charter’ Move to the East (Socialism)
1972- Economic War ‘Action harsh harsh
implementation of the Nakivubo pronouncement’, the most
active economic group the Indians of British citizenship were expelled and
given 90 days to leave Uganda; at the time they were 3% of the population controlling
more than 80% commercial activity of the Ugandan economy.
1977- Peak of an economically unviable state
characterized by hyper inflation, international isolation & sanctions,
scarcity of essential commodities (issuance of
chits) and Amagendo by mafuta mingi (Smuggling)
1982- Revival of Co-operatives that had
collapsed
1983- Return of Asians expelled in 1972
1986-1990- Berlin
Wall collapsed, final nail in Cold War- a War between Capitalism of the West
and Socialism systems of the East, with Capitalism winning Uganda Economy
Liberalisation is cemented and started with the SAPs (Structural Adjustment
Programmes- IMF/World Bank initiated and led)
1987- Currency reform which knocked Two
zero’s off the Uganda shillings and creation of the ‘1986 Millionaires’ (class
of entrepreneurs who have worth more than a million dollars mainly aided by
state association or bluntly put- Corruption)
1991- Start of Implementation of sale of
Government owned Assets- PRIVATISATION, 1986 Millionaires in action
1997- Opening of the only Stock Market in
Uganda, The Uganda Securities Exchange to mainly provide a transparent platform
for implementing and spreading out privatisation
1993-2000- Collapse
of major Banks of Greenland Bank with muslim holding run by ex-Governor of the
Uganda Central Bank, the International Credit Bank (ICB) an indigenous bank run
by the then enterprising Katto family, Co-operative Bank owned by the then
limping Co-operative Societies spread across the nation, Sale of the then
largest bank Uganda Commercial Bank (UCB yes we had our own KCB)
2003/2004- Banking
sector is on recovery, the Financial Services goes on to be an excellent
performing sector averaging double digit growth only bettered by the
Telecommunications sector
2008- Launch of the first mobile money
service, MTN mobile money
2011-2012- Record
inflation due to excess money supply in economy, attributed to parallel
currencies (old and new notes) in economy running and the money flow in the
2011 Presidential campaigns, Banks increase lending rates following Bank of
Uganda’s crackdown on inflation
2013- Old currency being withdrawn, foreclosure
market to liven, Banks tighten their credit issuance (real estate collateral
significantly loses credit attraction value).
2013-2070- late
2000’s discovery of Black gold or Oil cash-flow (out and in), management and utilization
of this OIL resource, should give guidance on the future of UGANDA MONEY!
VALUE of Money
Money derives
its value by being declared by a government to be Legal tender.
The money supply of a country consists
of Currency (bank notes and coins)
and Bank money (held in Bank
accounts also known as record money), Uganda is said to have 4 million bank
accounts out of population of 33 million bank accounts across its 26 Commercial
banks therefore by far the largest form of money supply here is Currency/Cash hence
the term commonly used Cash Economy-
of late electronic mobile phone enabled money is catching up.
Uganda Legal Tender: Uganda Shillings;
Coins (10/=, 20/= (Uchumi Nakumatt issue this change), 50/=,
100/=, 200/=, 500/= & 1000/=) Paper (1,000/=, 2,000/=, 5,000/=, 10,000/=,
20,000/= & 50,000/=)
Monetary Policy
Fiat money, the current world order, has
no value it therefore has to be managed.
Monetary policy is the control of money
in the economy and it is a process by which government or economic blocks
(Central Bank, Eurozone Central bank, Federal Reserve Bank) manage money supply
to achieve specific objectives; the main goal of monetary policy is to
accommodate economic growth in an environment of stable prices.
A failed monetary policy effects
include: hyper inflation (Zimbabwe), high unemployment, shortage of imports,
recession (USA, Eurozone).
Uganda is a semi controlled free market
economy where people are allowed to determine prices of goods and services
under the watchful eye of the Central Bank which intervenes at and when it
perceives risk e.g. the 2011 excess money supply scenario was responded to by
the Central Bank.
In Missiri/Egypt the government
determines the Rent citizens pay as opposed to the market (land lord and tenant
agreement or disagreement) here in Uganda; In Egypt tenants are very powerful
more than landlords- this is a direct sluggishness in the development of Rental
real estate as the capital holding magrebs prefer to build resorts along the
Nile and Mediterranean
Money Functions
Money can and will fulfill the functions
below;
Ø Medium (of exchange)
To pay for
goods and services, this sorted the Barter trade system challenge of the double
coincidence of wants i.e. one had to need what their barter trade exchange
partner needs and vice versa
Ø Measure (Unit of account)
Provides a
measure, divisible into smaller units; acts as a basis for quoting and
bargaining of prices. The important usage is as a method for comparing the
values of dissimilar objects.
Ø Standard (of deferred payment/debt)
To settle
debt, debt has a premium so as inflation is managed i.e. that is such that
another’s money does not lose value.
Ø Store of Value
This is
very much manifested in stagnant savings
Money Functionality Argument:
There is an argument on the role of money
as a medium of exchange being in conflict with its role as a store of value: its role as a store of value requires holding it without
spending, whereas its role as a medium of exchange requires it to circulate
Types of Money
–
Commodity money, is tagged to a commodity and value is derived from there, the commodity
could be: gold, silver, copper, salt, rice, shells, cigarette etc
–
Representative money, token coins/ paper money that can be reliably exchanged for a fixed
quantity of commodity- it’s not fixed to commodity
–
Fiat money, is value by Government Order (or in-order like Zim dollar crisis), the
Value has no real basis, easy to replace, carries less risk, You know its costs
more money to make a 500/= coin as compared to a 50,000/= paper note.
–
Coinage, are coins
they are still used example gold coins
are used for large purchases like buying military equipment, silver for
midsized transactions and copper coins for day to day transactions- are more
durable form of money.
–
Paper Money, bank notes which began as promissory notes for depositing bulky coins,
reduced risk as its transportation is easy and its traceable (serial numbering)
-
Commercial Bank Money (Demand deposit), money Legal Tender here is held in ledgers or record; it’s from it that
the economic revolutionary Credit Creation originates, there is risk of demand
deposit not being fulfilled (2013 Cyprus eurozone Bank crisis before that the
1990’s Banking crisis that saw closure of: Greenland Bank, International Credit
Bank-ICB, Co-operative bank and to an extent UCB-Uganda Commercial Bank) In
Uganda demand deposits are insured to a tune of 2,000,000/= anything above is shauri yako (your risk), products
operated in their are savings and current accounts through transaction of
cash/cheque/ATM.
Advantage
here is ease of issuing debt
Disadvantage,
inflation is just a print away and the related speculative impact by its very
nature- too much leverage, the 2008 USA’s Financial Crisis (still ongoing as at
2013) started in Banks taking excessive risk by excessive leverage (issuing
housing debt to those who could not afford)
-
Digital Money- Today & the Future, this is in three main categories i.e. Internet, Electronic and Mobile
telephony, the first two mentioned are entwined with Banks i.e. Internet
banking Electronic Funds Transfer (EFT) and others.
Mobile
Telephony Digital money, this was
hatched in our neighbourhood by Safaricom creating the revolutionary M-Pesa
mobile money product which inspired our own MTN Mobile money, Warid Pesa,
Airtel and Orange Money; this technological innovation is going to ensure that
most of Africa skips the heavily leveraged and toxic if you like (because of
their superior ability to increase individual consumer debt obligation through
leverage) Banking products of Credit Cards. Safaricom’s M-Pesa is
fast turning into a Bank in its own right with the introduction in 2013 of its
M-Shawri product a micro credit product charged monthly @7% I think. In Uganda
we have more mobile money accounts (approx 9m) than Bank accounts (4m). It is
interesting to see the traditional Banks scramble to create mobile phone
platforms like: dfcu money, Centemobile, Standard Chartered’s Hands instead of
Feet. Going forward mobile money transaction will increase if costs of
transaction go down- this will happen as initial set-up costs are recoverd and
competititon heats up
Money Intermediary:
Banks (Central/Government Bank,
Commercial, Development, SACCOs, Village banks) and Mobile Phones through
mobile money
Uganda Money related and relevant Facts: The
Power Brokers and Actors
- Uganda’s GDP at Purchasing power
parity (PPP) is 50 billion dollars
- NSSF, is a 1 billion dollar (2.6
trillion UgX) fund has 500,000 members who save with it, accounts for 2% of the
Economy at PPP.
- Sudhir Ruperalia is worth $900 (2.3
trillion UgX), controls 1.8% of Ugandan economy
- Power in the financial system in
order: the President, Donor community (Euro & USA), Secretary to the
Treasury and his Deputy, Catholic Church (Centenary bank), BoU Governor,
Kasekende brothers (Deputy Governor BoU & Standard Chartered M.D), Standard
Bank Investments (Stanbic), MTN Mobile money, Sudhir Ruperelia (Crane bank),
Legistlature (M.Ps)
- Most technical Ugandans in the
financial sector; Kagugube (Centenary), Kasekende brothers (BoU & Standard
Chartered), Kibuuka brothers (dfcu & Stanchart), Mweheire (Stanbic NEW),
Kisaame (dfcu), Byarugaba (NSSF), Karuhanga (Stanbic), Fabian Kasi (Centenary)
- De La Rue a British Company which has
a subsidiary in Uganda, prints the Uganda Shillings Legal tender on behalf of
the Central Bank almost all Bank cheques; its therefore worth mention in the
money system of Uganda. Charles Mbire of
MTN fame is involved in De La Rue Uganda’s operations.
Transition from the Industrial to the Information AGE
In the late 1800 and early 1900 the
Industrial age fully arrived in Uganda, the Industrial age was at its peak in
its originating country Great Britain they explored the new world to access
cheap raw material and labour to sustain their industries, In Uganda we
contributed Tobacco and Cotton supervised by the colonial system.
The Information age is understood to
have started in the Unites States of America in the mid 1970’s with the growth
of the Internet- it is driven by knowledge as opposed to industrial age’s
control over the physical factors of production of especially Land and Capital
and is the world order to-date
For Uganda the transition can be
elaborated in that in the Early 1900’s
Sir Apollo Kaggwa was believed to be the wealthiest Uganda thanks to his
adventures in the 1900 Buganda Agreement where he become an unrivalled Land
Lord and to-date Sudhir Ruperelia a Ugandan of Indian descent is believed to be
Uganda’s wealthiest individual thanks to his majority holding in Crane Bank a
Financial services actor.
Muhimbise’s understanding of Money:
Ø Money is important as it buys: medicine, food, pays for basic comfort
(housing) and basically allows one to not only stay alive but thrive on this
earth
Ø Muhimbise’s Money Philosophy:- I RESPECT money and know that money has feelings
once its treated bad (lavish spending, excessive risk, too much fear etc) it
goes away but once its nurtured and looked after well you attract it like a
magnet.
Ø Rich beliefs attract wealth/money
Ø Attention and care over money in the early years allows you to keep and
grow real wealth.
Ø Money is managed between the limits of Greed and Fear; Greed to make much
more with less effort and Fear of losing it all- i.e quotes like the higher the
risk the more the profit; fortune belongs to the bold amongst others
Greed is good, helps us take Action on opportunity, ‘nfuniramu wano’ what
is in it for me
Fear is fertile ground for inaction, although it helps in recognition of
risk, it should not be excessive so as to kill initiative and action.
Important Facts on money;
-
Just like religion organizes people’s
understanding of the world beyond science, money organizes commerce or exchange
of goods and services plus payment of debt.
-
Money is not an end in itself- it’s a
means to an end; it: will buy medicine to cure ailment, will buy food to cure
hunger, will pay tuition to acquire knowledge amongst many others.
Money is very much a Tool of War: for
Power Supremacy and fighting against poverty if you like
Money & Power: CHOICE
To chose between power and money, the
former is my automatic choice, as it to larger extent controls the latter
Money Conclusion
To a large extent therefore Money is
controlled by the state/government/politicians in-charge of the military,
therefore as an Individual if you are to have total control over money then
take Control of the STATE, nonetheless at an INDIVIDUAL level you can work
around the four quadruplets below to take charge of your Money as in general
terms governments generally act in good faith towards their citizenry and this
is how;
The Inseparable Quadruplets: Earning, Saving, Investing and
Expenditure
Whereas Money is controlled centrally by
the government, at a personal level either one takes control of the central
management of money (Take control of government) or work around the four
quadruplets that relate to money- which is within anyone’s: reach, ability and
can be worked upon/towards personally- below I explain the quadruplets and
their relationship to Money adding my ‘take it or leave it’ wisdom
How the Quadruplets Inter-relate with
Money
1. EARNING
Also
known as Income, this is
the sum of all: wages, salaries, profits, interests payments, rents and other
forms of earnings received in a given period of time
Salary, commission and wages for an employee,
salary and dividend for Self-employed, Business owner Dividends and Capital
Gains on sale and Investments owner (land, houses, shares, businesses etc),
royalties for intellectual property- these relate to all the Factors of
Production in Economic speak
Muhimbise’s Take!
Earning is a puzzle of attitude,
where there is an opportunity to provide value and its paid for that’s earning,
don’t focus only on what you studied: I personally studied a bachelors of
Business Administration degree but I have worked at the following as earning
avenues: Researcher, Procurement Trainee thereafter Consultant, Fish trader,
Stock Market trader & Advisor, Tour Guide, baby sitter, Economics private
tutor, Business Writer, TV show contributor, Translator to English for
Luganda/Rukiga/Runyankore, manager of raw sand (Kirombe) deposits, a Private
Equity discussant, an International Company Representative and Agent, a
Trustee, a Director Trainee, A brick layer, a Speaker, a Messenger/errands boy
and I continue to pile on earnings opportunities; my philosophy is as long as I
have the time I will take on the earning opportunity because I have learnt lots
of skills and real life scenarios from doing things out of my comfort zone
(what I studied).
Because from my Education I learnt
four major literacy’s of: how to Speak, how to Read, how to write and how to
count and compute numbers (numeracy), these make me trainable in anything and
everything.
Build on your knowledge and
understanding of earning opportunity, it’s is not by mistake that employees
study till University and work at specific job, so seek out to Learn about
target investment.
Focus on quality sustainable
earnings, could be of less return If something/earning opportunity is too good
to be true- it’s just that too good e.g. forex trading bubble, sports betting
and its odds
Take responsibility and full control
of your earning early, track and record them by among others reconciling your
bank statement, this will give you a clear understanding of your earnings and
way forward
Debt/credit, is an earning- it is
income of tomorrow brought forward to today; it’s a future income you access at
a premium, It’s like a double edged sword; you use it well (as in to earn more
income and pay its premium/interest) you benefit from leverage; you misuse it-
it could get you jailed or even bankrupt
Factors that contribute to high
income: Education, Globalisation, Economic freedom, Knowledge/Innovation and
Peace or absence of war
Relation to Money: It does
not matter how much money you earn, what matters is what you do with what you
earn. The very reason why sometimes salary increments or money windfalls just
worsen people’s financial woes.
2. SAVING
I view saving as investment and investment
as deliberate action saving;
Savings are in two forms: you will
either save for near future income for expenditure OR for much later bigger expense,
example you might buy a small piece of land with goal of buying bigger land
once the small one appreciates; like our fore fathers before us practiced this
with their crop stock i.e. seeds were kept in the Granary (for feeding the
family similarly money could be kept on savings account to cater for short term
needs) and hanged at the kitchen Fireplace (for seeds to be planted at the
onset of next planting season similarly saving for retirement by starting off
buying shares worth 50,000/= per month with possible cumulative impact from
your 20’s )
Muhimbise’s Take!
If you cannot save 1,000/= of
10,000/= you will always fail to save
that 10% even when a billion shillings is at your disposal it will be impossible
to have a 100m on you- just the percentage law of money.
Set savings targets and monitor your
performance, sacrifice, delay gratification on expenditure, make priority (20/80)
as per Pareto’s rule check out the 20% items that consume 80% of your income
and review accordingly,
My personal saving target for 2013 is 2m
per month (1m on stock market and 1m at my Investment Group)
Be content with what you have, channel
energy to going where you hope to go, use peers as inspiration and not pressure
or origin of envy
Write a will, in this exercise you
discover your current status from your eyes; gives opportunity to confirm and
declare who you are including your current financial status
Savings provide a bridge to and for
investment, otherwise you will not be in position to even know opportunity let
alone take it on with zero saving
Saving is not idle money, cheap talk
that under looks savings as idle cash is idle
Create saving habit, excuses for not are
in plenty- I have children I can’t save, richest persons are married and have
kids too; take responsibility and stop whining and faulting everything around
you (clumsy reasoning to avoid Action)
Relation to Money: Savings is
about the percentage (quality) of your earnings not the big figure (quantity)-
if you cannot work with a little there is no proof (since you will
automatically lack the money practical
knowledge) you can accumulate much.
3. INVESTING
In economics, investment is related
to saving and deferring consumption. Investment is involved in many areas
of the economy, such as business management and finance whether for
households, firms, or governments.
In finance, investment is putting money into something
with the expectation of gain, usually over a
longer term. This may or may not be backed by research and analysis. Most or
all forms of investment involve some form of risk, such as investment in
equities, property, and even fixed interest securities which are subject, inter alia, to inflation risk.
In contrast putting money into
something with a hope of short-term gain, with or without thorough analysis,
is gambling or speculation. This category would
include most forms of derivatives, which incorporate a risk element without
being long-term homes for money, and betting on horses. It would also include
purchase of e.g. a company share in the hope of a short-term gain without any
intention of holding it for the long term. Under the efficient market hypothesis,
all investments with equal risk should have the same expected rate of return:
that is to say there is a trade-off between risk and expected return. But that
does not prevent one from investing in risky assets over the
long term in the hope of benefiting from this trade-off. The common usage
of investment to describe speculation has had
an effect in real life as well: it reduced investor capacity to discern
investment from speculation, reduced investor awareness of risk associated with
speculation, increased capital available to speculation, and decreased capital
available to investment.” Wikipedia Internet
Muhimbise’s Take!
Linking saving to Investment= Financial
intelligence- it’s not about how much money you make but how much money you
keep (save) and how hard that money works for (investing) and how many
generations you keep it for. (Kiyosaki)
The higher the return the higher the
risk
Knowledge (financial) diminishes
RISK (financial), deliberately up your investment knowledge
My personal goal as an investor is
to achieve financial freedom with the sole purpose of ‘having an independent
minded me, who is able to meet the basic needs and some wants for a comfortable
and desirable of life devoid of ostentation’
When investment is talked about the
most common excuse is Capital/money;
Capital is from the Latin word
capita, capita means head in Latin (Latin is Roman catholic
Church’s language and is mother to all European languages of English, Italian,
French, German, Swedish etc English we
are accustomed to I sthe least developed language from Latin), e.gs sell
opportunity and take share or commission, start small and learn along the way
When
in ACT of Investing
-
Financial
intelligence, work towards improving your financial IQ, it’s no secret that
many University graduates cannot read a bank statement (credit and debit); the
reason you see many people who did not go to school making it- they are
financially literate they understand money and its movement, they know the
difference between Assets (make you money) and asset-liabilities (lose you
money)
-
Complete
project, half efforts = half returns, do things deliberately and completely
-
Avoid
MAN/Peer investments e.g. daddy worked 40 years to build you will not do same
under 7 yrs of work without commensurate effort
-
Never
fall in love with investment deals, be willing to walk away and do so if you
feel so
-
Don’t
be in a hurry to make money- Take time and effort otherwise conmen are in
plenty and it heightens ones Greed
-
Can
One invest without saving/money: YES use your capita/head and accumulate your
saving- you will but with less power since money from elsewhere, they say when
a wise person meets a rich person, the wise goes away with money and the rich
goes away with wisdom, a win-win exchange
-
Some
of the best investment opportunities are dressed in ugly coats of hard work,
effort- that’s why many a people cry out and give up; they are about solving a
need in community
-
Some
of the best actionable opportunities not seen by eyes but brain, you do not
invest because your friend is doing a certain business and has bought a car,
Rolex business replica dilemma = Zero innovation; Don’t Follow the HERD its
running from somewhere!
-
Rich
beliefs attract wealth, the more you invest you upgrade and the opportunities
are immense the dictum ‘the rich get richer..’ is true if you have a million on
your savings account there are opportunities that will present themselves a
situation which would not occur if you had 100,000/= only
-
Steer
clear from the negative and cynical persons, they have no idea what it takes
they just want everyone to stay at the same level as them year after year
-
Failure
is fine (and you will at times fail), aiming for second best isn’t, though
school abhors failure, I personally view it as school fees for my Master
program in Continuous Investment, over the recent past years I have computed
and appreciated that for every 10/= profit I make from INVESTING, 3/= is
lost/loss (investment school fees) and I keep 7/=; so in effect I make some
lose some and at the end of the day I keep more than I lose = Investing.
-
Power
of numbers, look out for synergy and investing as a Group, eg the Rats Network
Investments Group, not only do you pool funds, you share risk and
understanding, put on table your strengths and there is compensation of
weaknesses as well.
-
You
cannot attract what you resent, this is usually a function of human emotion- we
hate rich people even without reason, I personally despise corrupt people
because they partake in cheating my government, but the rich where effort is
evident (they at times have their faults like all of us) I like them very much
and like to seek them out to tell me of their wealth formula- Everyone has one,
every investment has one as well.
-
Keep
a record of your investments so you know the performance; when to exit if
mature when to hold on
-
Investment
risk is managed by diversification, serial entrepreneurship is Ugandan case
study- there are several opportunities business people are spread across the
economy- serial investment
-
Set
investment targets for yourself, have something that will wake you up early
every morning to work towards e.g. build rentals Units for each of your
Children even when you have no Child yet- you will have set a powerful goal to
push you forward
Where I invest mainly: Stock Market,
Private Equity, RNIG Investment Group
Relation to Money: In the act
of investing, money is vital component as it brings in leverage or power; it
helps execute investment opportunities in real terms.
4.
Expenditure
I deliberately
have it as number 4, as the four quadruplets should be treated in this
sequence: you need to earn- no matter how much then save-regardless of what you
earn then invest- even the little you have; after allocating money for
saving/investment this Expenditure can come in. Always live within your means
focus on generating wealth and not just appearing RICH while piling up reckless
debt.
A spendthrift (also
called profligate) is someone who spends money
prodigiously and who is extravagant and recklessly wasteful, often to a point
where the spending climbs well beyond his or her means (income). The word
derives from an obsolete sense of the word "thrift" to mean
prosperity rather than frugality, so that a "spendthrift" is
one who has spent his prosperity e.g. BAD BLACK, Marie Antoinette causer of the French Revolution
Frugal- Milton Obote (Obote I,
1962-1971), Patrick Bitature, Warren Buffet, Bill Gates
Muhimbise’s Take!
Muhimbise’s expenditure Philosophy
-
A
buck should be thrown for a bang
-
Expenditure
also includes value expenditure (Investment) where one expects to get a direct
gain
-
Embrace
simplicity in living, focus on impact of what I do not how I appear in others
mind
-
Keep
track of my daily expenses and run a budget, excellent planning tool
-
Cut
wedding meeting attendance and contribution to control my expenses, I would
like to see people work with what they have and can comfortably afford, we the
young make weddings fit for our parents stature yet after we go to live-not
with our parents; since wedding meeting create a SOCIAL DEBT TRAP CYCLE ‘I contributed to you so come over plus
others and do the same’
-
Peer
pressure is real out of the teen age, you will spend reckless just to keep up
with friends, buy a car, rent in an up-market neighbourhood, install DStv full
package when you are never home and even watch soccer at the bar, stock your
house with flat screen leather seats when your pockets are bleeding, all this
to keep up with your peers.
-
Indian
strategy, Funnel- work your expenses to be less than income, it happens and
therefore is not impossible; otherwise you will keep whining how little you are
paid year after year; I don’t believe in too small or too big a salary, while
the office assistant has not enough money to buy a plot of land in Wakiso, The
CEO has not enough money to buy land in Kololo- COMMON SENSE
-
Health
and Wealth are my uncompromised expenditures, will spend as much as needed on
these two, as one keeps me healthy the other ensures I keep there and thrive as
well
Relation to Money: Expense
necessitates money to play her role of being a medium of exchange of goods and
services; ensure you get value for each shilling spent- you are your own keeper
of your money
Relating
the Four Money Quadruplets
Note:
Asset is something that keeps money in your pocket after investment.
Liability
is anything that continues to take money out of your pocket debt or after
investment. Wealth is how Long
Cash
flow Patterns of: Draw arrows as per below
1.
Rich- their income is directed
towards assets so as to accumulate more income from those assets
2.
Middle-Class- Most Income earned is
directed towards liabilities which inturn increase on their expenses, making
‘asset’ purchases that help raise their status, in effect to keep and help them
appear rich, they use easily accessible debt to finance what they would not
afford from savings and income; they keep appearances- American consumer
middleclass highly indebted; where most of US today will be or are
3 Poor- Every Income Earned is used
for Expense, they live hand to mouth. For the next pay
Food for
thought:
P Planning is bringing the future to the present so that you can start to do something
about in NOW. It pays to plan ahead; it was not raining when Noah built the
ark.
“For
the love of money is a root of all evil” Timothy 6:10
There is a
school of thought that material progress and prosperity, as manifested in
Income growth both at individual and national level, provide the indispensable
foundation for sustaining any kind of morality or immorality for that matter;
Religion thrives in poverty!
What do you think?
“Personal Financial Planning
is the process of solving financial problems and or achieving financial goals
by developing and implementing (ACTION) a personalized game plan. In-order to
be effective this PLAN must take into consideration the overall picture of an
individual i.e it must be coordinated, comprehensive and continous
(consistency) ”Akamai course notes
Author:
Andrew Muhimbise
Member of
the Rats Network Investments Group, (RNIG) Uganda.
Presentation
prepared for the Rats Network Investment Group 58th Meet Education
Agenda, presented on 14th April 2013 at Makerere. Andrew is also a
blogger @ www.eatrader.blogspot.com
Special
recognition to;
The
Akamai Financial Leadership and Management Practical course April 2012 (www.akamaiglobal.co.uk 0751 516118)
for the practical knowledge imparted
Websites;
Wikipedia, Bank of Uganda
