Part 2 of this article will address questions and feedback received from readers of part 1 of the article. Many readers had a challenge accessing the list of accredited stockbrokers from the Debt Management Office (DMO) website. The address of the actual link to the list is rather long, so I have provided the link to the downloads page here – https://www.dmo.gov.ng/fgn-bonds/savings-bond/ . If you look down the page, the 6th item (as at April 23, 2017) is ‘Updated List of Stock broking Firms accredited by the DMO to Market and Distribute FGN Savings Bond’.
Click on this and it will take you the download page for the document. Locate the red download button to the right and download the list to your phone or computer. This is the list of stockbrokers licensed to deal directly in the FGN Savings Bond market.
The next step is to decide on which stockbroker you want to use. This is easier for folks who live in Lagos, Abuja or Port Harcourt. Many stock broking firms do not have offices outside of Lagos. For those who do not live in a major town, this becomes a challenge. Your best bet is to search online for stockbrokers in your town. For example, if you live in Oshogbo, you can search for ‘stockbrokers in Oshogbo’ on Google without the quotation marks. If your search returns no result, chances are there are no stockbrokers in your town.
You have about three options. One option is to look for stockbrokers affiliated to banks. Banks owned stock broking firms some years ago before a CBN directive ended the practice. While some banks still retained those stock broking firms by forming a group structure that transferred ownership of the stock broking form from the bank to the group, some banks sold their shares in those stock broking firms. Such stock broking firms may still have an arrangement whereby you can pick up account opening forms from a branch of their former parent bank, fill and return the forms.
A second option is to look for a stock broking firm that has provisions for opening an account online and open one.
The third option is to locate and visit the nearest branch office of a stockbroker and open your account. This may be your most viable option.
You may need to only travel once. During that trip, apart from opening your account, you will be assigned an account officer you can transact business through without having to travel every time you need to do a transaction with the stockbroker. In subsequent transactions, you may be able to receive forms via email to print out, fill and sign, scan, and return by email as an attachment. This means you need to have a working email address and access your mail regularly.
Doing a search online may be a challenge for many because of the type of phone they have. If your phone can access the internet, you can do a search. In today’s world, you need to have an email address and be able to look for information online. Don’t be left behind. You need to upgrade. If you cannot use your phone, you can visit a Business Center to carry out your transactions (always remember to log out of your email account before you leave, and don’t save your password – to prevent another user from logging into your account using your saved password).
So the starting point is to locate a stockbroker you want to deal with. If you need to travel to open your account, collect all the information you need before you hit the road. You may be required to bring along passport photographs, means of identification, proof of address, etc. The best way to find out is to call and ask.
The interest earned is based on the formula for simple interest:
I = P x T x R
Where ‘I ‘is interest earned, ‘P’ is the principal or sum invested, ‘T’ is time in years, ‘R’ is the rate divided by 100. Using the previous example whereby you invest N100,000 at 13%, to calculate your quarterly interest (every 3 months), P = 100,000, T is 3 months which is 1/4 of a year (0.25) or you can count actual days divided by 365 days. R is 13% divided by 100 which is 0.13.
So I = 100,000 x 0.25 x 0.13
= 3,250.00
To increase your interest, you have to increase your principal or investment. If your goal for example is to earn N60,000 every 3 months, you can calculate how much you need to save and invest towards that goal.
Looking at the simple interest formula again,
I = P x T x R
P = I / (T x R)
So, to earn interest (I) of N60,000 per quarter at 13%, you need
P = 60,000 / (0.25 x 0.13)
= 1,846,153.85
Your quarterly interest is paid into your account as indicated in your application form. When the bond matures in 2 or 3 years (depending on the tenor you subscribed to), your principal is credited back to your account.
If you consume your interest, your principal will not grow. To grow your money, you need to save and invest your interest also, unless you are retired or out of work and need the interest to take care of your family.
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