How to sustain children's upkeep

2010-04-18
THE PUNCH Newspaper- Gbenga Agbana


Sustaining the upkeep of children is not an easy task, especially when they grow up enough to start attending school, right from kindergarten, through primary, secondary and tertiary institutions.



In a country characterised by insecurity, unstable jobs and instability in the socio-political milieu, it is important for men to plan for any unexpected occurrences like sudden death, loss of jobs and other related exigencies.



There is also the need for young workers to provide shelter for their children, since if they suddenly die or become incapacitated, their trusted friends or even siblings may not accommodate the family of the deceased.



Dealing with such situations require long term planning and diversification of investment avenues by young workers, especially those with salaries that allow them to live above board.



To some experts, there is need to invest in stocks on behalf of the children, get insurance policies for them, especially those related to educational endowment and above all, building a house, no matter how small, for the family, to enable the family to continue to live together under whichever emergency.



Some experts also stressed the need to open school fees accounts for children, or opening other accounts in banks, which would be supervised by a guardian, and be kept from the children until they attain certain age, to enable them to complete their education to whichever level.



Commenting on the need for workers to plan for the future of their children, the former Chairman of the Capital Market Solicitors Association of Nigeria, Mr. Anthony Idigbe(SAN), said it was very important, but he stressed the need for people to diversify their portfolios to enjoy maximum benefits.



He said, ”I agree that there is need for persons to start early investment in a diversified portfolio of assets, such as cash, real estate, shares and insurance policies. The ideal thing is to have a balanced portfolio. Some of these investments are liquid in the sense that they are cash or near cash or relatively easy to convert to cash, like publicly quoted shares. Others are illiquid such as real estate, because it takes a long time, say like one year and above to convert to cash. The truth is that we need a little bit of liquidity, so that we can meet our daily needs with available cash. We also have other needs such as a roof over our head, which investment in real estate can solve,



” Cash itself does appreciate in value, it follows that holding all your excess income in cash over time results in depreciation in value, notwithstanding the interest payment received on cash, particularly if the interest is below the rate of inflation. On the other hand, real estate and shares enjoy capital appreciation and shares enjoy capital appreciation and potentially can give higher return, whilst still attracting rent and dividend respectively. However, they are not as liquid as cash and as such, may not be available to enable a person to meet urgent cash needs. Also there can be systemic risk that can result in sudden depreciation in the value of such, during capital market meltdown.



”The challenge for every young person is to plan early to have a balanced portfolio, which can enable him to solve different problems and withstand market uncertainties.‘‘



To a telecommunications service provider, Mr. Tayo Eleoramo, who retired from one of the conglomerates in the manufacturing sector and now runs his own business, planning for retirement early helped him to take care of his family, even after retirement.



He said, ”It is always good for people to plan for their retirement early enough. I started saving early enough as a young worker and it paid off. I opened school fees account, bought shares for them and arranged insurance policies for them. The share I bought about 22 years ago have enjoyed major capital appreciations and bonus issues and the insurance policies I did for my children are now providing the required fund for their education.



”Such savings and investments give room for certainty when a young worker retires and even if he dies. It is very important and it must be taken very serious by any person who wants to enjoy life after retirement. Insurance policies are also good for persons who take them, because it helps them to take care of health issues and prepares them for the rainy day. I also started building my first house early because I saw the need for my family to stay together under the same roof and it has paid off, because the value of the building can only appreciate.‘‘



The Chief Operating Officer of Hightower Insurance Brokers Limited, Mr. Victor Fatunla, shared the views of Idigbe and Eleoramo. He explained that despite the pension reform being put in place by the Federal Government to ensure compulsory savings by workers, it is very important for young workers to arrange life assurance policy and some other insurance policies for their children‘s education and above all, imbibe saving culture early enough to guard against any emergency situation.





 

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