Goals-Based Financial Consulting

13/05/2022

Understanding Bonds
A bond is a loan by the lender to the borrower

The lender is also known as the creditor or the investor

The two categories of investors in bonds are;

Individual investors, e.g., HNWI
Institutional investors, e.g., pension funds
The borrower is also known as the issuer or the debtor

While there are many types of borrowers, the two main issuers of debt securities/bonds are;

Sovereign governments, e.g., The Government of Kenya
Companies, e.g., EABL
Bonds issued by the government – government bonds – have minimal credit/default risk

Bonds issued by companies – corporate bonds – carry with them credit/default risk, especially the non-investment grade category

Generally, government bonds have a lower yield to maturity than corporate bonds. Most sovereign government bonds have the full faith and credit of the issuer.

Now and then, companies and governments raise external capital.

Companies may borrow money to fund day to day operations or engage in new value-generating capital projects

The government may borrow money to fund payroll and other expenses, engage in infrastructure projects, provide welfare benefits to its citizens and residents, and subsidize various activities.

In exchange for borrowed money, the borrower promises to pay the lender a specified rate of interest (called the coupon rate) on specified dates and to repay the borrowed money (called the principal or the face value) at a specified date (called the maturity date/redemption date.)

Interest payments can be annual, semi-annual, quarterly, or monthly.

For the case of Kenya, many bonds (both Treasury and corporate bonds pay interest on a semi-annual basis, i.e., twice per year or after every six months

When a company or government borrows money, they do so through financial markets by issuing securities that are called debt securities or bonds.

31/05/2021

Never spend any portion of your income before you have saved. To begin with, a minimum saving rate of 10% on every income you earn is a good starting point. As a matter of fact, those who can do a higher rate should as more is preferred to less.

27/05/2021

"If you built castles in the air, your work need not be lost; that is where they should be. Now put the foundations under them."

- Henry David Thoreau, Walden

26/05/2021

" The happiness of those who want to be popular depends on others; the happiness of those who seek pleasure fluctuates with moods outside their control; but the happiness of the wise grows out of their own free acts"

-Marcus Aurelius

25/05/2021

Whether formally or informally employed, individuals will have to take greater responsibility for funding their own retirement in the future than in the past. The reality is that, our older self is going to live off our younger self. The big question then becomes, how much are you setting aside to cater for your retirement needs when you are no longer actively working.

At GBFC, we help you think through in an articulate manner a retirement plan that addresses your personal situation.

We also help you in the plan implementation to ensure you remain oncourse towards attaining retirement financial independence

24/05/2021

"The single greatest edge an investor can have is a long-term orientation." Seth Klarman.

20/05/2021

Individuals should start to learn personal finance as early as in high school in order for for them to avoid making bad financial decisions as soon they start earning. For those of us who are past this stage of life, we can only commit to the acquisition and application of such knowledge now and look to the future to deliver us financial success.
At the same time we should be thankful for our past money mistakes that offered us invaluable and timeless of how not to live life. E.g., being overly excited about a promise of sky high returns without ever asking at what risk only to find out that we signed ourselves into a pyramid/ponzi scheme.
It is good to learn early on that there are no sure or easy paths to riches. Becoming rich is hard, staying rich even harder.

18/05/2021

Individuals have unlimited wants but limited resources to meet them. I am of the view that individuals spend a better part of their lives being trained, formally or informally, on how to make money. However, they are either untrained or unproperly trained on how to keep and grow the money they make. It is the lack of this requisite knowledge that most people find themselves spending more than they earn, essentially living beyond their means. It is an unsettling thought to note that most of the overspending by individuals is for purposes of lifestyle maintenance as opposed to investment. This is not a good place to be for anyone for the simple reason that it deprives one of financial flexibility so much needed and especially so when a rainy day day comes knocking. It surely does. Lack of financial flexibility leads one to engage in borrowing which in most cases is usurious. The end result is a vicious debt cyle that more often than not proves difficult to for anyone to break away from.

For those whose financial house is in disorder and would like to begin the process of bringing it back to order, the moral lesson here is:

Learn to spend less than you earn
Save before you spend.
Avoid consumption debt which is considered bad debt.
If you must take on debt, consider low interest rate debt.
Actively seek to understand how to grow your money through investments that match your source of income, stage of life as well your measure or perception of wealth.

At GBFC we help you figure this out and start you off on a path of financial extreme makeover.

17/05/2021

Among the many financial goals that individuals have, retirement planning goal is one of them. Those in the accumulation/saving phase of retirement should have a written down retirement plan stating how they intend to achieve comfortable retirement.
At goals-based financial consulting, We help you articulate this goal with clarity and purpose.

17/08/2020

Heard of an investment promising crazy returns, don't be too quick to invest.

In the century since his arrest on Aug. 12, 1920, Charles Ponzi’s name has been linked to the scam that led to his eventual conviction and imprisonment

03/08/2020

A personal financial plan in line with your goals serves to guide you towards financial freedom. Investing in shares or bonds? How does it work? Is it suitable for you? and if so, How can it work for you?

27/07/2020

Good morning. Personalized financial consulting is important in building a viable financial plan suitable to your particular circumstances and financial goals.