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How Does Mutual Fund Work in Nigeria

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It doesn’t make any sense to have so much money in your bank accounts and it is not doing anything; it is just there, idling away and losing its value by the day. So, you decide to be wise and put say hundred thousand naira (N100, 000) in a mutual fund, let’s say the money market fund.

At the end of the year that hundred thousand naira would have earned thirteen thousand profits compared with how much you would get as interest or lose if you put your money in a savings’ accounts in regular savings accounts in Nigeria. Sometimes, you won’t even get anything – SMS charges, ATM card maintenance fees, stamp duties, etc. would have deducted a good chunk of your money before the year runs out.

Instead of leaving so much money in your bank accounts, you can move the fund that you do not immediately need to a money market fund. You would then enjoy interests on your money accumulated over time with no penalty.

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mutual funds

Let’s discuss mutual funds -what it is, what you can do with it, how you can invest in it, and how much you stand to profit from a mutual fund.

So, What Is A Mutual Fund?

First, you don’t need to be in finance guru to invest in a mutual fund and you don’t need to have so much money to invest in a mutual fund; anybody can invest in it. A mutual fund is basically a type of investment fund that pulls money or gathers money from different investors to invest in different securities like Treasury bills, commodities, stocks, securities, etc.

You don’t need to worry about what your money is being invested in because there is a fund manager whose job it is to take care of your investments and then give you your profit at the end of the day.

Types Of Mutual Funds (in Nigeria)

There are different types of mutual funds. Different investment companies offer different types of mutual funds and even call it different names. Some of the mutual funds available are

  1. the equity mutual fund
  2. the Guaranteed Income Mutual Fund,
  3. the money market mutual funds
  4. and many others.

Case Study: Money Market Mutual Fund in Nigeria

The money market mutual fund is really great for people who do not have so much money and people who are looking for an alternative to saving their money in a bank accounts. Now, if you put your money in one of the money market funds for instance you put N100,000 in money market fund, would are assured of earning a descent interest rate at the end of the year.

The current average of the interest rate for money markets mutual fund right now in Nigeria is about 13 percent. So, you put a hundred thousand naira in a money market fund, at the end of the year that N100, 000 would have gained N13, 000 profits. You probably might think that is a small amount but compare that to putting your money in the bank; how much you would get if you put your money in savings accounts in regular savings accounts in Nigeria banks.

I’m not saying don’t put your money in a savings accounts. All I’m saying is don’t be a bulk of your money in your bank accounts; it doesn’t make any sense to have so much money in your bank accounts and it’s not doing anything, not making any profits. So, instead of leaving so much money in your bank accounts, you can move the fund that you do not immediately need to a money market fund.

The good thing about the money market fund is that you can exit the investment(s) at any time with no penalty. You can enjoy your money anytime and you watch the interest grow every day. You get returns on your money every day. In fact, you don’t have to wait for a whole year to get your money back.

For example, you decide to exit the mutual fund investment after six months. All you will get is the accumulated percentage I interest up to that moth which would be half of 13%. This together with the capital you invested with will be paid to you and you go with both your principal sum and the profits.

How Do You Invest in a Mutual Fund in Nigeria?

There are different types of mutual funds in Nigeria and how much money you can make from these depends on the interest rates paid by the mutual fund which in turn depends on the type of mutual fund you are into.

In the money market fund, for example, you can know how much you’ll be able to make from a money market fund because the kind of securities that fund managers invest the money market fund in are fixed income securities.

In the fixed income type of investment, from the entry point of the investment you already know how much you’re going to get. You already have an idea (i.e., they already tell you at the point of starting this investment how the market works including the current interest rate. The interest rate fluctuates anyway.

So, how do you know which one is right for you to pick?

The first thing you need to decide is you need to find out what your risk appetite is. Risk appetite here refers to how much of a risk taker you are. If you are the kind of person that doesn’t like to take a lot of risk, then the money market mutual fund is the best option for you because the risk involved is very low and it’s also very flexible. So, you can decide to just leave at any point.

However, if you are somebody who is a bit more of a great risk taker then you can go for the equity mutual fund. The returns on an equity mutual fund are much higher because stocks are more profitable than the fixed income securities. The profits are higher for equity mutual funds but don’t forget that the risk involved is also high; you can lose some of your money but it is still safer investing in an equity mutual fund. Here, you are not going to trade stocks on your own because there’s a fund manager to handle that on your behalf.

No matter the type of mutual fund, there is always a fund manager who handles everything for the investors. He/she/they take care of the trading and everything for the investors. So, you can go to sleep while your money works for you.

The equity mutual fund is great for risk takers. Like I said, the risk is lower compared to going to trade stocks on your own. The fund manager has a wealth of experience than you in this unless you are good at trading stocks yourself.

If you are a medium risk taker, you should go for the guaranteed mutual fund. I’m not sure if all the investment companies in Nigeria offer this but it is very popular amongst investment companies in the world. The guaranteed mutual fund is like a hybrid of the equity mutual fund and money market mutual fund. Here, some part of your money is invested in stocks and some part of it is invested in fixed income securities. So, you get medium returns and risks involved are also medium.

For someone who is just starting out investing in mutual fund, Iwould advise you to first try the money market fund and see how it is. Understand how it works first instead of just diving into something risky like the equity mutual fund or the guaranteed mutual fund.

If you want to invest in the money market mutual fund, just look for the for an investment company, fill all your details that the company requires and go ahead to deposit the minimum investment amount required. You can deposit as much as you want up to millions of Naira. The higher the principal sum that you invest, the higher the profits that you would earn at the end of the trading cycle.

Some Companies You Can Invest in Mutual Funds in Nigeria

Different investment companies run different mutual funds with different names. Let me examine just two of them below.

1.      ARM Investment Company

ARM Investment Company is one of the companies operating mutual funds in Nigeria currently. Here, you can start with as low as 1,000 naira and you just keep adding and adding to it and it keeps on growing it over time.

2.      Stanbic IBTC Asset Management, Afrinvest

Stanbic IBTC Asset Management and Afrinvest are other companies that operate mutual funds in Nigeria. They are quite good and you can start investing with for as low as five thousand there and just keep on growing and growing from this.

These two companies are great for students and also great for low income earners. They together with the ARM Investment Company mentioned earlier are very good for people who are looking for an alternative to a savings account that will give them better returns which their Nigerian bank accounts would not give.

3.      First Bank of Nigeria Fixed Income Fund (FBN fixed income fund)

One of such mutual funds in Nigeria is the First Bank of Nigeria Fixed Income Fund also known as FBN fixed income fund. It is managed by FBN quest asset management which is a subsidiary of FBN quest merchant bank which in turn is a subsidiary of FBN holdings nigerian limited, the owners of First Bank of Nigeria, the oldest bank in Nigeria.

FBN holdings have been in operation in Nigeria for over a decade now and a lot of Nigerians are shareholders in this company 2007. First Bank of Nigeria, the parent company of FBN holdings which operates the FBN fixed income fund is one of the longest-operating and trusted banks in Nigeria. This, among other credentials accounts for the huge patronage of the FBN fixed income fund in Nigeria.

You can be a happy shareholder in FBN holdings today and also enjoy the dividends from this company.  Since the parent company is a highly trusted company in Nigeria, you should trust its subsidiaries to make good decisions with your money through the fixed income mutual fund.

The FBN fixed income fund started in 2014 and over the period of its operation, the annual yield or annual interest or the profit that the company has made with whatever money they were investing it was 10 in 2014, jumped to 16.17 in 2015, fell to 6.38 in 2016. There has been incredible increase in the profits or percentage margins for the past 4 years between 2017 and now (2020).

However, this year’s performance has not been really resounding because of what happened this year (the coronavirus epidemic, protests, etc.). The data for this year is not available yet because this year is not over yet. However, information from the company has it that the year to date yield is 14 that’s for eight months, January to August.

The fixed income mutual fund is not the only mutual fund that is run under the FBN quest asset management. They have various other mutual funds see all the different mutual funds that are run by the company here: https://fbnquest.com/asset-management/products/mutual-funds/

However, the fixed income mutual fund operated by FBN holdings is arguably the most popular because it is very affordable. With as little as (though “little” is relative) but with as little as 50 000 naira you can invest in this mutual fund. The good thing is that when you get more money you can add to your portfolio to grow it.

If you are a salary owner and you give yourself a share of your salary every month and you are disciplined about it, after your initial investment of 50 000 naira every month, you take your share of your monthly salary and throw it into this fund. What they will do is that they will include the addition for you and hence more yield for you. You keep doing that every month for as long as possible. A mutual fund can be your retirement fund. Just make it a point of duty to be adding money to it every month till whenever you wish to stop. Of course, a mutual fund is a long-term investment and you should treat it as such.

Conclusion

Investing in mutual fund in Nigeria depends on you especially your risk-taking capacity. If you wait till you have so much money before you invest in mutual fund in Nigeria, you may wait for a very long time.

What you can do could be to set aside a particular amount of money that you send to your mutual fund company every month probably deducted from your salary. If you are a business person, you could just decide how much do you want to be putting in your money market fund at the end of every month.

You have to make it a monthly commitment to be putting something, a particular amount into your money market fund and that’s that. The money would keep growing and you’d be glad you did.

I want to believe that you have learnt a thing from this lesson today. Have a nice day and happy investing.

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GLO Tariff Plan 2020 – List of Tariff Plans and Price

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GLO Tariff Plan 2020 - List of Tariff Plans and Price

More popularly known as GLO, Globacom Limited is a multinational telecommunications company that is based in Nigeria, and was founded by Mike Adenuga.

Though they were established on the 29th of August 2003, Globacom Limited has set a record in Nigeria among telecommunication companies for being the first to build what they call the Glo-1. Acquired from the United Kingdom, Glo-1 are high capacity, submarine fiber optic cables, which are worth $800 million.

GLO Tariff Plan 2020 - List of Tariff Plans and Price

GLO Tariff Plan 2020 – List of Tariff Plans and Price

GLO acquired more than 44 million subscribers by 2018, making them the second largest Nigerian network operator. Apart from the fact that they employ more than 3,500 people from all around the world, GLO has also established itself as one of the best service providers for calling, and browsing in Nigeria.

The calling and browsing rates on GLO are very cheap, due to the various GLO tariff plans available. And it is very easy for any GLO subscriber to access, or opt into any of them.

There is also special call service available on GLO, which allows GLO subscribers to have access to cheap call rates. Below are some of the available GLO tariff plans:

GLO BUMPA

With a recharge of either 100 Naira or above, the GLO Bumpa tariff plan offers its subscribers a 200% bonus with each recharge.

As such, if you recharge 200 Naira on the GLO Bumpa plan, you get a value of 600 Naira, and if you recharge 300 Naira, you get 900 Naira. And this bonus can be used for a variety of things like browsing the net, sending text messages, or making calls to any other network.

The GLO Bumpa plan features free night calls, a bonus validity of 30 days, with no rental fees attached. GLO prepaid subscribers, and all those who port into the GLO network are free to use this plan.

The 200% bonus on the GLO Bumpa plan is available to the GLO Subscriber as long as he keeps recharging his phone. To join this plan, dial *100*10#, and you can also dial *122*2# to check your GLO Bumpa bonus.

GLO BOUNCE

Offering free migration for all GLO subscribers, with calls at a discounted 5 Kobo per second, and text messages at a rate of 3 Naira per SMS, GLO Bounce is one of the best tariff plans that GLO has to offer.

GLO Bounce subscribers get to enjoy a call rate of 10 Kobo per second to other networks in Nigeria. They also get 12am to 5am free night calls after using 30 Naira during the day, and free Facebook browsing. On each recharge of 200 Naira, they also receive 30MB free data.

A campus rate of 5 Kobo per second is available for all GLO Bounce subscribers in all Nigerian tertiary institutions. Dial *170*4# to migrate to the GLO Bounce plan, or *170*9# for the campus zone plan.

Important: Looking for a Job/Employment? Apply for Globacom Recruitment 2020.

GLO FREE TOMORROW

A ‘free tomorrow’ as implied from the name, the GLO Free Tomorrow plan gives a subscriber twice the value of what he spent for his calls, SMS, and internet browsing on the previous day. This means he gets today, 2X what he spent yesterday.

This free credit can also be used to browse, or call any other network. Dial *300# to join the GLO Free Tomorrow plan.

GLO GBAM

Available to both new and old prepaid GLO users, the GLO Gbam tariff plan allows any GLO user to add, and call 5 special Glo numbers at a much cheaper rate than they normally would.

This tariff plan has an on-net call rate of 15 Kobo per second, an off-net call rate of 15 Kobo per second, plus an on-net and off-net SMS rate of 4 Naira per SMS. GLO Gbam subscribers can send text messages to international numbers for just 10 Naira for each SMS. This plan also offers its subscribers 5MB for browsing, which has a 24-hour validity.

Migrating to GLO Gbam as a GLO subscriber is simple, you just need *100*5*1# on your mobile phone. To register the 5 special numbers, you just dial *100*1* New Number#. While *101*2* existing Special No*New Special No# is used to change one of the numbers you already have registered to a different one.

GLO INFINITO

Known to be one of GLO’s best tariff plans, GLO Infinito allows its subscribers a special call rate of 22 Kobo per second. This prepaid plan offers this with no hidden rentals, or charges attached.

This tariff plan would be more useful to business owners since it allows them to have up to 10 numbers as family and friends numbers. And calls to the family and friends numbers goes for 11 Kobo per second. Dial *100*9*2# to migrate to GLO Infinito, and *101*1*number# to add a special number to the family and friends list.

GLO YAKATA

Exclusive to new GLO subscribers, the GLO Yakata tariff plan is another awesome plan from GLO, and offers GLO subscribers some rather remarkable call, and data benefits.

GLO subscribers on the GLO Yakata tariff plan enjoy 6 gigabytes of data, which has a validity of 6 months, as well as 2200 Naira for voice calls, every time they recharge 100 Naira.

Some of the benefits of GLO Yakata are:

  • The call benefits enjoyed by the customers allows them to call any network, and they get more benefits with each bigger recharge.
  • The first 200 Naira recharge of every month gives the customer a data bonus that is 2.5 times greater than the normal GLO Yakata bonus. And if the recharge is more than 200 Naira, the data bonus increases proportionally as well.
  • The GLO Yakata data bonus is only available to the customer on the first recharge of each month, and for the first six months since he activated the line only.
  • And the bonus itself has a seven-day validity.

Important: Learn How Internet works and the roles of the different Internet companies in Nigeria here

GLO JOLLIFIC8

The Glo Jollific8 is another tariff plan that is exclusive for new prepaid customers. And this time, the plan gives each subscriber 8X more value on each recharge they make on their mobile phone.

To enjoy the benefits of this plan, the GLO subscribers need to recharge their GLO line with either 100 Naira, or bigger than that. Apart from the 800% bonus on every recharge, subscribers also get free gifting data that can be shared to other GLO users, and a call bonus, which can be used to call all networks in Nigeria.

Read the breakdown below to understand how much voice, and data bonuses you stand to gain on each recharge.

  • N100 recharge gives N800 + 10MB (N50) = N850
  • N200 recharge gives N1,600 + 25MB (N100) = N1,700
  • N500 recharge gives N4,000 + 50MB (N200) = N4,200
  • N1,000 recharge gives N8,000 + 100MB (N400) = N8,400
  • N5,000 recharge gives N40,000 + 500MB (N2,000) = N42,000

GLO JUMBO SIM

One of the few plans that is available to both new and existing GLO subscribers, the GLO Jumbo Sim tariff plan is a prepaid plan that offers a preloaded credit of 200,000 Naira to both the new and existing subscribers, which can be used to send text messages, make calls, and even browse. But these benefits are only available after they have recharged their GLO lines with a certain amount of credit.

But this data, and voice bonus is only available for 14 days after the GLO subscriber has unlocked it, and before the customer unlocks it, it is valid for only 6 months, after which it expires. Dial *224# to migrate to the GLO Jumbo Sim tariff plan.

To check your locked data bonus, dial #122*24#, and dial #122*23# to check the unlocked bonus.

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