Young People - Budget (Part 4)

What is a budget?

Budget is a document (written down) that contains all the expected income, the projected expenditures and investments/savings of an individual, organization, or even government.

Here is a budget of typical youth earning a salary of sh. 30,000/- p.m.

ITEM	AMOUNT
Rent	7,500/-
Bills (water, Elec, etc)	2,500/-
Shopping	3,500/-
Transport	4,500/-
Pocket Money	6,000/-
Total expenditure	24,000/-(80%)
Total Income	30,000/-
“Surplus”(Savings)	6,000/-(20%)

Is this budget good enough?

Why do we need a budget?

There are a lot of reasons an individual or an organization would need a budget:

1. Planning for the current and future economic goals.
   Budget can help an individual make realistic goals for the future. Budget will give an individual an accurate idea of how much one can actually afford at the moment and in the future.
2. To avoid hitting bankruptcy(Overspending)
   Budget protects an individual from “economic-devil” of overspending and hence avoiding one from incurring heavy debts that might lead to bankruptcy.
3. To have control over the money.
   With the budget in place one will always have to counter-check the details in the budget before making any spending. The best thing can happen to an individual when it comes to economic matters is to have control over money.
4. Better emergency response
   With a working budget one will be in a position to respond well when it comes to emergencies such as sickness, accidents, loss of jobs among others.
5. Debts and Credits Tracker.
   With a budget one is in a position to know the status of debts and credits.

Parts of a budget

A good budget should contain at least six major sections;

1. Income section.
   This gives an account of all the income that is received or expected(one is sure) within that period of budget.
2. Debt section
   This gives the account of debt you are willing to settle within that period of the budget.
3. Credit Section
   Amount expected to be paid back to you from the debtors within that period of the budget.
4. Expenditure section
   This covers the day-to-day expenditure, monthly bills, shopping expenses among others. This section should be well elaborated on each item name and cost. This is a crucial section that most individuals mess.
5. Savings/Investments section
   This is a section where the amount/percentage to be saved/invested is mention. This section take into consideration all the above sections.
6. Emergency section
   This section covers the insurances and other forms of emergencies savings that should enable an individual respond well when need arises.

How to budget

Total Income(100%) = Income + Credit

Total Expenditure(<70%) = Expenditure(65%) + Debt (5%)

Total Savings (>30%) = Savings/investments(>15%) + Emergency savings(at-least 15%)

Conclusion

One must not use more than 70% of the income to sustain the current lifestyle because it will have a big impact in the future.

Total Income(100%) =Total Expenditure(<70%) + Total Savings (>30%)

Young People - A.I (Part3)

What kind of investment should one do?

Do you just buy yourself a dream car?

Should you just invest everything you have? 

Part 3 of Young people articles tackles the allocation of investments(A.I).

ALLOCATION OF INVESTMENTS (A.I)

This is the far most important activity that investors must undertake before committing their monies.

When one is into investment, be it shares or running business, the main purpose is to get returns that is suppose to uplift that individual economically. In A.I one has to strike a balance between risks and rewards. '' Don't put all your eggs in one basket.'' As an investor one should take a moment and ponder on priorities in his/her life. This is simply achieved by counter-checking with a working budget (complete and functional one).

There are three categories of Investment Allocation :

1. Fixed Income Investments

2. Varying Income Investments

3. No Income Investments

   

• Fixed Income Investments

These are types of A.I that deliver predictable returns, no matter the economic situation. This type of investment has the highest security and can be used to facilitate the basic needs of an investor comfortably.

An investor makes allocation for this kind of investment so as to get constant returns(to cater for house, education, food, cloths etc). With such A.I one is safe and sure of the basics needs are always covered. A 'trouble-free' investor will be able to develop more, economically.

Minimum of 60% of the total investment.

Examples : Bonds and debentures, insurance, even a home.

• Varying Income Investments

These are types of A.I that can give you good returns, no returns and even a loss. This type of investment has little if not no security at all and thus cannot be depended upon to cater for crucial needs. Investors use this kind of investment to try their luck, experiment or even just to achieve a certain goal that isn't economically.

This kind of A.I is 50-50 one can gain a great deal of even lose a great deal hence the allocation should be moderate.

Maximum of 30% of the total investment. 

 Examples: Starting a business, trading in shares, currency trading etc

• No Income Investments

This category of A.I that delivers nothing in returns and neither does it improve the economic situation of the investor. They are usually carried out to improve the social status of the investor or to fulfill a dream.

Maximum of 10% of the total investment.

Examples: Buying a second car/home, changing T.v. Set, remodeling the house etc.

Conclusion

''There are only two words that will always lead you to success. Those words are YES and NO. Undoubtedly, you’ve mastered saying YES. So start practicing saying NO. Your goals depend on it!''

Jack Canfield

Young People - Equity Investment (Part2)

If full economic stability is to be achieved and the world is to liberate itself from poverty, then people should start thinking and acting like businessmen. Just assume that you have lost your job now, what would happen to the lifestyle you are living?

Young Men and Women also say that they have time to invest, before they realize it is too late and have mouths to feed, hence become salary dependant. By 24^th day of the month the person lives on loans to be paid when salary comes.

Start saving and investing NOW!! 

 

How to start an equity Investment

One needs to visit any commercial bank that is involved in the trading of shares. Open a CDS (Central Depository and Settlement account), deposit some money and instruct the stock brokers to buy you shares. Monitor the capital market to see how the shares you have are doing and trading them to your advantage.

Reason to choose Equity Investment over other forms of investments

I have prepared six or so reasons as to why one should actually do equity investment.

1. Easy like ABC.

It is pretty easy to start an equity investment as explained above the activity should not even take more than 60mins to complete. Unlike other forms of investment like say, running a shop, it doesn’t require a constant supervision. Very suitable for a ‘side business.’ With the technological advances one can also trade shares online in real time.

2. Money working for you.

At the end of a financial year the corporation you bought your shares from will release its performance of the previous year and give dividends to the share holders. The money you invested in that company will work for you (probably when you are sleeping) and give you some profit that you don’t even know how it came about.

You can buy shares of a small company and after 10yrs of running the company has grown to a multi-billion company and the market value of the shares will definitely rise. You sell the shares and ripe off the profit.

3. It’s a form of saving.

The equity investment is a better way to invest unlike in banks where you are given all forms of accessing your money (OTC, ATM, Cheque, and wire transfer) and the money is subjected to several charges to operate the account. The investment made in the shares can be ‘forgotten’ and also gain value in terms of bonus shares, capital appreciation, and dividends.

4. Playing Part in Economic development.

By investing in a corporation that is running in a particular country, then you are definitely an asset to the economic growth and development of that country. The small investments made by several individuals can end up creating employment to the jobless individual on the streets therefore reforming the streets and boosting the economic situation of the country.

5. A perfect economic back-up plan.

Future is never certain in terms of economic position. A lot of misfortunes can come your way and not be in a position to salvage yourself. Fatal accident, loss of job, and sickness but to mention a few can really bring you down. With an equity investment in a week, you can sell the shares and get the cheque.

6. Collateral for business financing.

A good track record of shares portfolio is acceptable collateral for financiers. Suppose you want to start a business and you have little of no capital at all to start, your share portfolio can assist you gain financial assistance, usually 60% or less of your portfolio.

Conclusion

“When you consume your whole salary, you are just another net consumer and a burden to the economy; when you save a good percentage of it, you are a potential entrepreneur and wealth is bound your way.”

Lets us make this coming financial year (12-13) an investing one and we improve our living standards.

Young People & Investments

An equity investment simply means the purchasing and holding of shares of stock, (on a stock market) by individuals or firms. They anticipate income from capital gains and dividends, as the value of the stock rises and the companies make profits respectively.

Forms of investments

• Shares of stock
  
  Shares are portions(fraction) that a company/organization divide its assets into and offer them to private or public. Thus shares of stock is the amount invested in the company by an individual/company. Total sum invested in a corporation mostly by an individual or a group of persons.
  Shareholder is a individual with shares of stock, and is entitled to dividends. Dividends is a share of the distributable profits of the company. The more shares you own the much dividends one receives.
  A shareholder can also make capital gains by selling the shares when the value of the stock rises.
  
• Bonds/Debentures
  
  Bonds are basically debts. Companies/ corporation sales bonds to individual to increase the capital base of the of the company. When an individual or a group of persons purchase a bond it simply means that you have given credit to the company/corporation (even government) at an agreed return rate. The investor in this case is referred to as a creditor to the company.
  Here there creditor is not affected by the outcome of the company's activities weather losses or profits. Bond is a form of loan that has a maturity period after which the creditor is paid back the amount invested and the accrued interest agreed upon investing.
  The creditors have a higher claim of the company's asset than the shareholders in case the company is declared bankrupt.
  The interest are usually paid in an agreed rate(usually semiannually) within the maturity period and after the period, you receive the principle amount.
  The term “Bonds” is used when the government is the receiver of the investment while “Debentures” refers when a private institution is the receiver.

Conclusion
You want to start a business and the you cannot raise the capital, you approach a relative for a loan of Sh.100k and agreement is written done to “pay back after one year with 5% interest”. (This a debenture and the principal amount is Sh.100k while the interest rate is 5%). You run the business for a while and later sale half the shares of the business to your friend at sh.50k. You put it in writing that the business issues 1000 shares and friend takes 500 at sh.50k . (Now the friend is a shareholder with 50% of stock). By end year business has a turnover of sh.500k, you pay the relative sh.100k plus sh.50k interest. The cost of establishing the business was 100k and the cost of paying the personnel including you is sh.200k. The profit (500-150-100-200)k = sh.50k. Then you pay sh.25k to the friend (shareholder) and yourself (owner). Now the sh.25k paid to the shareholder is called dividends.
Try the questions below.

Question 1.  

Company A offers 11% stock at Sh. 143 while company B  offers 9.5% stock at Sh. 117. Of the two which is the best investment?

Question 2.
How much must one invest in 10% stock at Sh. 96 in order to obtain an income of Sh. 650?

                                                                   Any comments are highly appreciated.

MICROWAVE INTERNET

Introduction

Microwaves are extremely high frequency radio waves. Finding most use in the mobile phones industry, in the kitchen (microwave ovens), Radars (meteorological, airplanes, ships and military), and latest, used as a medium to 'fast' Internet connection.

Optical fibers use tiny glass tubes to propagate information (through light) and it is the current mode of Internet connection that is considered the fastest. Cables interconnect Europe, Asia, America, and Africa.

Shares and currency trading has become the modern day ''land''. One can lose or gain massive 'wealth' through shares and currency trading. The trick about shares and currency trading is buying 'them' when the price is least and sell when the price is higher. That is it, you gain/lose the difference. Here speed is of greatest essence.

Comparison between Optical fiber and Microwave technologies

It is well known that both light and Microwaves are forms of electromagnetic waves. That simply means that they have similarities in their characteristics if not same properties. All Electromagnetic waves travel at a maximum Cosmic speed ( C = 3.0 * 10⁸ m/sec) also known as the speed of light in a vacuum. The only difference between light and microwave is the wavelength whereby light has shorter wavelength compared to Microwaves.

But when it comes to the medium which the two travel, then the speed may have a little difference

which may matter a lot.

• Optical fiber.
  This consists of small glass 'tubings' inside which the light travels. The speed of light in a glass tube is estimated to be 2.0 * 10⁸ m/sec.
• Microwaves.
  Here the medium is air and considering the fact that air can offer more or less no resistance to the microwaves hence the speed is estimated to be higher than 2.0 * 10⁸ m/sec.

Conclusion

Microwave Internet connection can provide a faster connectivity and less response time when it really matters. The preference of using microwaves over optical fibers is justified in high stakes (shares and currency) flash trading, small difference in response time amounts to big earning/losing.

Kenya and Service Level Agreement (S.L.A)

Introduction

S.L.A is a service contract that is suppose to cover the kind of service, the availability, the amount to be paid, and the conditions under which refunds are made to the client among other conditions.

As the name suggests, this is an agreement strictly on service, affected industries are the likes of Medical services, Amenities supply (Water, electricity, gas etc), telecommunication (voice and data), transport(road, rail and air), media(visual and audio), learning institutions, cloud computing and others. Employees also fall into this category since they are expected to provide a certain kind and level of service hence sign a kind of S.L.A at recruitment stage or when ranks change.

We shall tackle keys areas that have hitches in Kenya:

• Medical services

This is a service that the community cannot do without and hence expected to be given priority by the government. NHIF(National Hospital Insurance Fund)...REALY!!!!?????? I don't know where to start because the people running this institution are a couple of nincompoops that think it is their time to eat!! The so called long arm of the law seems to have being 'folded'. Listen here politicians, Kenyans don't need a political stand on this matter!!!!! All the contracts to be cancelled immediately, the money paid back and 'people' to go to jail. This is a serious case bwana Public Prosecutor. And yes, watu wafutwe kazi!!!!!!!

• Amenities supply

Water supply and Electricity supply.... Hehehe! (These institutions are managed by couple of nut-case people) These guys put up an Ad on the Daily news papers and think that is enough. Kenyans have had it rough, how do you explain to a company that has subscribe to a power & lighting company for electricity and then the supplier just post an announcement that there will be interruption of Electricity. How does that help the company to dig deep in their pockets to fund another mode of getting electricity? The same to water supply. Kenyans need to see the contracts and must cover the way of compensating clients.

• Transport industry

Taking kenya public transport is like gambling in a casino, the fare rises with every raindrop, due destination changes with the operator's liking, and the string of insults. Now that the transport industry, more so the road has saccos to run the business nothing much has changed.

• Telecommunication

The likes of safaricom, Airtel, Yu, Orange, Zuku among others being the so called giants in both voice and data service providers. Need to make their S.L.A public and the ministry incharge of information to bargain for we the clients. CCK the sleeping commission should either be disbanded or new blood be brought to handle the industry.

• Learning institutions

kenya has over 6 public universities that were established by an Act of government to train professionals at various fields. The universities still run as if are village and don't care what happens when one has graduated and what the market wants. I am one of those who went through a public university and soon after graduation felt the pinch. There is a body called JAB (Joint Admission Board) that selects students from across the country who attained a certain threshold to join the universities to purse a certain career path. Remember JAB is a government institution, and another group known as ERB(Engineering Registration Board) which like public universities was established by an Act of parliament. The two JAB and ERB cannot sit down together with the public universities and agree on the way to solve their issues???!!

A student receives a letter from JAB to attend a certain University to do an engineering course and even receives forms from HELB to access the loans for his/her studies. The student takes 5years in the institution and clears all the course work and even practicals and finally Graduates. The parents and friends are very happy of the determination of the student and great expectations are now on the shoulders of the 'graduate'. Harsh reality checks when they start applying for jobs where all the conditions are the course must be accredited by ERB and the HELB fellows are behind their back with threatening emails and physical letters asking for repayment of loan.

The government should step in and take action. The public universities, JAB and ERB have failed in their service provisions to Kenyans and Kenya needs a fresh.

Conclusion

When an individual or a company incurs heavy costs to subscribes to a service then the supplier has no option but to make the services flow throughout as stipulated by the contract signed. Otherwise interruption of the services means a breach of contract and hence clients must be refunded for the extra cost or loss of business.

Kenya has the worst service delivery considering it calls itself 'the superpower' of Eastern and Central Africa. Apart from all government workers and employees signing S.L.A (performance contracts) kenya needs to see more S.L.A signed by all the players of the service industries and the agreements made public.

CLOUD COMPUTING

Introduction:

I know for sure the first time you guys heard cloud computing no one had an idea what the well known mobile operator meant. I'll try my best to make the explanation as simple as possible. 

 

According to wikinvest.com/concept/cloud_computing : "It is a technology that uses the internet and central remote severs to maintain data and applications”. It goes ahead and gives yahoo and gmail among others as examples. Another definition: “A general term for anything that involves delivering hosted services over the internet”.

In layman's language...It is a service provided to persons and business entities via the Internet by host companies that have sufficient infrastructure and security. The clients simply log in the service provider’s site and make use of the service they subscribe to at a cost. 

 

Categories of cloud computing:

These are basically the types of services one is likely to get in a cloud.

1. Infrastructure-as-a-Service (IaaS)

When a client subscribe to this category, it simply means having an ‘external hard drive’ somewhere safe with the information. The clients basically pay for storage facilities the same way one would pay for a space in a go-down. The charges solemnly depend on the amount of space you require. The client can use the space as a server (virtual) to run all the machines.

2. Platform-as-a-Service (PaaS)

This is a category that provide the client (you) with a set of software, and product development tools that are actually in the service provider’s server. Depending on the type of software a client chooses then the cost is calculated by the number of software and tools you subscribe to and the frequency of use (mostly done on time basis). Good examples of PaaS are Google Apps.

3. Software-as-a-Service (SaaS)

This is a category that distributes software to clients hosted by the service providers. The software service can be anything from database processing, email, and inventory control. Here the service provider hosts both the application and the data. Client can work from anywhere as long as there is a computer and internet connection.

Pros & Cons

• Services are sold on demand and charge per duration of time and number of users.
• Service is elastic. Can have as much as you want and also as less as you want.
• Loss of computer doesn’t affect loss of data or running of business.
• The client has no additional cost on security or any other cost, all covered by the host.
• Unstable internet connection could affect running of business.
• Data back-up and high level of security cannot be guaranteed.

Conclusion

1. Cloud computing: It is a service provided to persons and business entities via the Internet by host companies that have sufficient infrastructure and security
2. IaaS – Storage. PaaS-Applications. SaaS – Both Storage and Application.
3. SME’s should consider Cloud as a way of cost cutting and flexibility.

References

1. en.community.del.com
2. thebeckon.com
3. webpronews.com
4. wikinvest.com/concept/cloud_computing

How did the Friday the 13th myth get started?

In the Western world, a significant chunk of the population suspects bad things
will happen whenever the 13th day of a month occurs on the day of the week called
Friday.
Like many human beliefs, the fear of Friday the 13th (known as
paraskevidekatriaphobia) isn't exactly grounded in scientific logic. But the really strange
thing is that most of the people who believe the day is unlucky offer no explanation at
all, logical or illogical. As with most superstitions, people fear Friday the 13th for its
own sake, without any need for background
information.
The fear of Friday the 13th stems from two separate fears -- the fear of the number 13
and the fear of Fridays. Both fears have deep roots in Western culture, most notably in
Christian theology. Thirteen is significant to Christians because it is the number of people
who were present at the Last Supper (Jesus and his 12 apostles). Judas, the apostle who
betrayed Jesus, was the 13th member of the party to arrive. Jesus was crucified on a
Friday. Additionally, some theologians hold that Adam and Eve ate from the forbidden
fruit on a Friday, and that the Great Flood began on a Friday. In the past, many Christians
would never begin any new project or trip on a Friday, fearing they would be doomed
from the start.
Sailors were particularly superstitious in this regard, often refusing to ship out on a Friday. According to unverified legend (very likely untrue), the British Navy commissioned a ship in the 1800s called H.M.S. Friday, in order to quell the superstition. The navy selected the crew on a Friday, launched the
ship on a Friday and even selected a man named James Friday as the ship's captain.
Then, one Friday morning, the ship set off on its maiden voyage... and disappeared
forever. A similar, entirely factual story is the harrowing flight of Apollo 13.
Some trace the infamy of the number 13 back to ancient Norse culture. In
Norse mythology, the beloved hero Balder was killed at a banquet by the mischievous
god Loki, who crashed the party of twelve, bringing the group to 13. This story, as well
as the story of the Last Supper, led to one of the most entrenched 13-related beliefs:
You should never sit down to a meal in a group of 13.
Both Friday and the number 13 were once closely associated with capital
punishment. In British tradition, Friday was the conventional day for public hangings,
and there were supposedly 13 steps leading up to the noose.
Source: http://people.howstuffworks.com/friday-thirteenth.htm
With the aim of mapping "the relation between health, behaviour, and
superstition surrounding Friday 13th in the United Kingdom," its authors compared the
ratio of traffic volume to the number of automobile accidents on two different days,
Friday the 6th and Friday the 13th, over a period of years.
Incredibly, they found that in the region sampled, while consistently fewer
people chose to drive their cars on Friday the 13th, the number of hospital admissions
due to vehicular accidents was significantly higher than on "normal" Fridays. Their
conclusion:
"Friday 13th is unlucky for some. The risk of hospital admission as a result of
a transport accident may be increased by as much as 52 percent. Staying at home is
recommended."
Paraskevidekatriaphobics — people afflicted with a morbid, irrational fear of
Friday the 13th — should be pricking up their ears about now, buoyed by seeming
evidence that the source of their unholy terror may not be so irrational after all. But it's
unwise to take solace in a single scientific study, especially one so peculiar. I suspect
these statistics have more to teach us about human psychology than the ill-fatedness of
any particular date on the calendar.
The sixth day of the week and the number 13 both have foreboding reputations
said to date from ancient times, and their inevitable conjunction from one to three times
a year (there happen to be three such occurrences in 2009, two of them right in a row)
portends more misfortune than some credulous minds can bear. According to experts it's
the most widespread superstition in the United States today. Some people won't go to
work on Friday the 13th; some won't eat in restaurants; many wouldn't think of setting a
wedding on the date.
Source:  http://urbanlegends.about.com/cs/historical/a/friday_the_13th.htm