PHRealWealth Blog


Aug 182018

In August 2001, I joined a financial services institution in Lagos as a marketer. As has been my custom, the first thing I keenly observed was the outcome of the life of those who have successfully gone through the career path I was starting. How they fared after age 65 was an ideal reflection of how I would fare at their age if I go through the system. My findings actually sturned me a bit. I discovered that many of these persons were stars in their heydays, yet no matter how much money and position they got, the outcome of their lives after retirement was less than desirable. I learned intuitively, that unless I started doing some things entirely differently, I would end up just as they are.

Interestingly, this pattern often plays out in much similar way in every career and vocation. Self-employed professionals and artisans alike discover that personal input diminishes with age and they cannot pursue their careers beyond a certain period in their lives. In the process of studying ways in which standard of living could be sufficiently enhanced and improved during such period, I have come to identify two types of approaches or mindsets: Blind Trust and Zero-Based Strategy.

How would you feel if you arrived in a city and about to check into a 5-star hotel, and then the room attendant gave you this customer service pitch with topmost excitement and a smile saying:
“Mr. Dele, you are highly welcome to the best Hotel in our city. We sincerely believe you had a wonderful trip. Your room is ready for your check in, with all the facilities on standby for your utmost comfort. In addition, we usually insist on personally helping our VIP guests like you to brush their teeth, comb their hair, have their bath, knot their ties and generally dress them up for the day. Included in our first class services, we’ll also chose the best meals for you and help in feeding you while you concentrate on important things.

Our professionals are also available to execute all your official duties directly on your computer throughout your stay here. As a matter of fact, there is a remote artificial intelligence embedded into the hotel's WIFI that reads your mind and executes your work process 10 times faster after you just boot your system. These services are fundamental to enjoying your stay here and you are highly welcome. You can now check in for the best of your time with us.”

Would you accept the offer? Not even with your sleepy gaze in a night dream mode. But guess what? That is exactly the kind of offer we accept when it comes to our financial future – we turn it over to exotic five star financial service providers to run it for us. We take advice from their employees and expect to become rich anyhow. In exchange for assumed security and comfort we open up our vulnerability and give away our fortune like the proverbial Esau. At the end we cry foul, fight for entitlements and blame everyone else but ourselves for our misplaced priorities - this time, our financial future and life after retirement.

For example, the highest rate of return from a a bank's fixed deposit investment is not more than 11% (most investors get below 8%). However, a bank in Nigeria can make as much ore even more than 50% returns. Recently, a commercial bank was bold enough to declare 70% increase in its profit for the year ended December 2017. Recall that corporate profit comes in only after the directors are allowed to spend all they can possibly spend in the auspices of running and sustaining the business. Hence, your fund creates gainful employment for them and their team and also profit for all to share in a ratio also determined by the directors. This is legally allowed as reward for taking the risk off you.

The Cambridge dictionary defines blind trust as a financial arrangement in which someone's money is invested for them by another person or company, who controls and makes all decisions about the investments so there is no possible conflict of interest, especially if the investor is a public office holder. Does this look like what you do? Can you have conflict of interest on your investment capital? Let us look at it: you turn your money over to your bank, the bank in turn invests your money in other instruments, gets over 70% profit on your capital, spends some more off it and creates more value for himself that is bigger than your money and then gives you 10% or less at the end of each year.

You hand over your retirement planning to a pension fund manager with advice from his employee, he (the PFM) then uses your money much in the same way as bankers and other fund managers, they make 70% or more. But guess what? He gives you little or nothing more than you put in there after only at your retirement. Worse still, you don't have any choice of changing him until retirement. You repeat this cycle over and again, off-loading any and every personal financial responsibility to such persons until you are laid off, you clock 65 years and then you come under pressure to learn investing by yourself! That’s way too late because you could lose all in just one day. What if you learned what they know or at least negotiated to invest wholesale from the start?

The term “zero” is a basic mathematical figure which connotes the absence of impurity and sentiment. In military strategy, the zero hour connotes the start off point of a well-planned and orchestrated operation where every member of the team is responsible and must be on the move or alert. This concept is based on intelligence gathering and has been applied in many aspects of finance and business strategy in the past couple of years. For example, there is zero-based budgeting. According to Wikipedia, Zero-based budgeting is a method of budgeting in which all expenses must be justified for each new period. Zero-based budgeting starts from a "zero base" and every function within an organization is analyzed for its needs and costs.

Also Brian Tracy developed an approach to strategic planning he calls “Zero-Based Thinking”. In his submission about dealing with any unfavourable situation, the way to tackle the future is to present a simple question thus: Knowing what I now know about this, would I still make the same decision? If no, then it’s time to reverse, regardless of what you lose in taking the decision to reverse. This aligns with the understanding that no matter how fast and how far you have traveled in the wrong direction, you can never get to your anticipated destination. In the two instances mentioned herein, zero-based concept implies three things
• Knowing and analyzing the facts
• Entertaining no sentiments and
• A call to action based on discoveries and expected outcome

For example, after observing that people who went through my career path were in financial situation that I was unwilling to experience at their age, I analyzed the causes. Second, I decided to tell myself the truth rather than continue in self-denial of always hunting for new jobs or positions with higher pay as a remedy to the impending outcome. Lastly, I took action to change my narrative and kept on adjusting as I learn in order to reach my desired goal. Operating in self-denial is blind trust. For example, some people use to say, “the money they got in their days is far less than what is paid us these days, so there’s no way we can end up like them.” This is a denial of the fact that in the late 1970s, a dollar was equivalent to 55k, and that naira has consistently lost over 400% of its value in the last 40 years. Hence, whatever amount you think that you receive now is about the same or even less in value than what they received in their time. Regardless of this, if the problem is that of direction, more money would not solve it.

The fact remains that how money is earned is more important than how much is earned. And the primary duty of every one who works to earn, is to consistently apply what he earns into changing how he earns (investing), as long as it takes until what he earns by not personally working for it surpasses what he earns by working for it. This is a process confirmed by experts to take 10 years or more to accomplish with several lessons that cost money and time. Your financial destiny cannot change by wishing or procrastinating or repeating the same default strategy and expecting a different outcome. It is not possible to reach a desired future by taking advice from those who have not been there or are not going there.

Hence, zero based strategy is an achievement planning technique based on constant feedback, review and reinforcement. For example, supposing your income is presently N200,000 monthly with an average of 5% annual raise, your goal could be to attain a passive income at least equal that amount in the next 10 years. If your predominant investment options deliver at a yearly rate of 10%, then you would need N24m lump sum investment in order to attain your current monthly pay cheque of N200,000. Even if you save 100% of your pay cheque it will take 10 years to save up N24m before you can attain your goal. But using zero-based strategy, your aim should be to consistently seek out investment options that would pay-off many times above 10% annually. This shortens your time of achieving your set goal and increases your capacity to replicate the model thereby helping you reach your goal faster.

Most career persons operate their financial future on a blind trust which is a self-denial default mode. At best they “go with the audience” which leaves them with a false sense of feeling that they are doing the right thing. The concept of the zero-based strategy hinges on the premise that everyone has equal amount of time and only a sense of urgency and self-discipline gets you there – not necessarily having too much money at the start. For the smart investor, the crowd is never an endorsement for a good investment decision and direction. Self-discipline determines everything from choice of association to choice of information and knowledge.

A person operating on blind trust believes that “everybody cannot be wrong to be investing in this way”. He “goes with the audience” according to the popular TV show Who Wants To Be A Millionaire. Ironically, when it comes to investing, the real millionaires do not go with the audience, and that’s what makes them stay rich. For example, the audience may use pension managers to plan for their retirement by investing retail on their product offerings. If the rich has investment in the same institution, he most probably invests wholesale at equity level. So, while the rich is free to have his money back at any time, or even more than his money to do just about anything he wants, the retail investor has to wait till retirement and with limited access to the eroded value to his money.

I leave you here with an advice that you make a decision today to take full responsibility of your financial future and start now to seek actionable information for wholesale investment. This is the only way to revert a financial crescendo after retirement age. For personalized investment plan write to

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