KIRYOWA N JAMILA

Muslima,wife,mother, financial enthusiast , financial advisor .

[Coach Samuel Ibanda, CPA @IbandaSamuel]

@RugabaAgaba @KakandeAlex These valuable lessons, thank you @RugabaAgaba for sharing. Indeed bonds favour those that invest with quite larger amounts and long term investors. Strategy is to first grow your funds through other avenues and then invest in bonds.

[KIRYOWA N JAMILA @Jamilakiryowa]

A bad work man blames his tools

[Rugaba Agaba @RugabaAgaba]

I BOUGHT GOU BONDS AND LEARNT MY LESSON (S).
Open Letter to Mr. Alex Kakande (@KakandeAlex )

Whereas the recipients of Paul’s letters at Corinth, Ephesus etc. may not have sent back written responses, I guess I will write on open letter to you regarding the gospel of bonds ( treasury securities) issued by the Government of Uganda.

It all started in July 2023. Following your posts & articles & podcasts on government bonds, I opened a bank account with a bank (primary dealer) and proceeded to open a Central Securities Depository (CSD) account. The bank/ primary dealer helped me open the CSD. By end of July 2023 I was good to go.

I bought my first bond of Ugx 200,000 in August 2023 on the bond secondary market. I bought the bond with a Face Value of Ugx 200,000 at Ugx 197,308.00 thus at a discount. The commercial bank/ primary dealer didn’t charge me any commission fees since it was bought on the secondary market. Good start, right!

In September 2023 I bought a Ugx 500,000 bond at Ugx 492,545. I got it at a discount and paid commission fees of Ugx 23,000. In October 2023, I bought a Ugx 500,000 bond at Ugx 515,305. I got it at a premium and paid commission fees of Ugx 23,000. In November 2023, I bought two bonds. One with a face value of Ugx 500,000 at Ugx 500,000 thus at par and another with a face value of Ugx 600,000 at Ugx 644,742 thus at a premium. I paid commission fees to the bank on both bonds totaling Ugx 46,000. In January 2024 I bought another bond of Ugx 900,000 at Ugx 908,550 thus at a premium. I was charged Ugx 23,000 by the commercial bank / primary dealer as commission fees. Finally, I bought the last bond in March 2024. Its face value was Ugx 800,000 and I paid Ugx 742,672 for it, thus a discount. I was charged Ugx 23,000 as commission fees.

In Nine (9) months from July 2023 to March 2024, I had bought bonds with a face value of Ugx 4 million at a cost of Ugx 4.0012 million. Not bad. Huh? But I had paid Ugx 115,000 in commission fees to the bank to acquire the portfolio of bonds. The primary dealer charges commission fees for retail investors interested in buying and selling treasury bills and bonds.

Then the coupons started flowing in November 2023. I got Ugx 75,750 in November 2023. In Jan 2024 I received Ugx 35,313 in coupons. In Feb 2024 I received Ugx 79,063 and in May 2024 I received Ugx 82,000 in coupon payments. In July 2024 I received Ugx 129,063 as coupons from the various bonds. By end of July 2024 I had received a total of Ugx 401,189 in coupons from the bond portfolio. In one year, the bond portfolio with face value of Ugx 4,000,000 had earned me Ugx 401,189 in coupons/ returns. This attracted withholding tax amounting to Ugx 42,519 thus net earnings/ coupons of Ugx 358,670. But remember the commercial bank had charged me aggregately Ugx 115,000 in commission fees and so I was left with Ugx 243,670 in net returns.

So, at the end of July 2024, I put the whole bond portfolio up for sale on the secondary market. I was offered Ugx 3,944,985 by my primary dealer/ bank for the portfolio of bonds with gross face value of Ugx 4,000,000. I sold them at a discount (or loss) of less than 2%. Not bad. Huh? The bank/ primary dealer charged me Ugx 23,000 in commission fees to sell off each of the seven bonds in my portfolio. Thus, the total commission fees charged on buying and selling the bonds grossed at Ugx 276,000 by the time I was done selling on the secondary market. That wiped away all the returns I had gotten in coupons. But the secondary market transaction was swift. The money was received within 24 hours which is similar to the cash redemption timelines in Unit Trusts.

I guess I have learnt invaluable (not painful) lessons. Bonds have high transaction fees compared to Unit Trusts especially for small or micro savings and investment. A typical bond purchase and sale may attract over Ugx 50,000 in commission fees and bank charges. I recommend that small retail investors restrict their transaction fees/ costs to maximum 2% of investment amount. In this regard, don’t invest in a bond any amount below Ugx 3 million! 2% of 3 million is Ugx 60,000. That will ensure that even a single coupon payment will be enough to recover all transactional costs and get a decent return in under 6 months to match or beat a unit trust return in the same period.

Buying bonds in small chunks attracts high transaction fees and costs. A micro/ small investor should probably aggregate their cash or savings in a SACCO or unit trust and later buy a treasury bond when they have a decent minimum amount, which I recommend to be Ugx 3,000,000 based on threshold of maximum limit of 2% of investment amount towards transaction fees. 2% of Ugx 3 million is Ugx 60,000 which is probably what a typical bank will charge a small investor for a single bond purchase on primary market and later sell it at the secondary market including bank charges.

Treasury Bonds are big boys & girls club. For micro or small retail investors, it is better to aggregate and then head to the bank or primary dealer with a good sum or else the bank will smile to the bank, at your expense. The whole point is to minimize transactional fees for retail investors. The other dynamics of bond pricing (both on the primary and secondary market) and bond yields may indeed need financial advisory services for those planning to commit huge sums of cash in bond investments.

The other thing I learnt is that bonds are easily liquidated. In this regard, Unit Trust don’t have an advantage over them on ease of liquidation. Banks/ primary dealers are obliged to buy from you if you offer the bonds for sale on the secondary market. The bank will probably pay you off in under 48 hours. They are also obliged to give you pricing for your bond(s) when you offer them on the secondary market. The bank/ primary dealer was open in sending the quotation/ selling price for my bonds before I issued final instruction to sell them off. I am not sure if this would have been any better if I had an opportunity to list them or offer them on an open market to get offers or quotations from other buyers apart from my bank or primary dealer. Will I go back to the bond market (primary and or secondary)? Yes. Have I learnt my lesson(s)? Yes. The rest I will leave to Mr. Louis Kizito (@LouisNkizito ) as he shakes regulatory tables and flushes light torches on bond trading legal frameworks. For now I will stick to my endowment funds (PruEduSave) by @PrudentialUG that are not easily liquidated and also offer life protection cover. Endowment funds also have minimal transactional fees for small and retail investors. In the future, I may do a combo of endowment fund and bonds to maximize returns, minimize transaction fees and enjoy life protection cover too.

Agaba Rugaba (REng)
Life Insurance Agent.

[David Eboku @DavidEboku]

@RugabaAgaba @KakandeAlex A great exercise for learning. The big lesson is: the small amounts of money you pay around or throw here and there is the real money.

Play with it and lose.

By frequently selling and buying you are giving out your money.

It's the deal in mobile money transactions too.

[Ian Wilbrod @ian_wilbrod]

@RugabaAgaba @KakandeAlex Had you spoken with a financial advisor directly? I believe you could have made some of these calculations beforehand. You would have known how tight it'd be.

[KIRYOWA N JAMILA @Jamilakiryowa]

@MuhanguziDARE @RugabaAgaba @KakandeAlex Ikr! Plus being a trader or short investor of bonds with small monies. This is the challenge most face when they attempt capital markets,half baked info! I suggest you use investment advisors who understand these things otherwise your still losing money carelessly.

[KIRYOWA N JAMILA @Jamilakiryowa]

@Enock_82N @KK_Mellon @SolomonSerwanjj

[Just Ivy Africa @JustIvyAfrica]

3. You Need Money to Make Money.

While having money can provide more opportunities for investment, it is not the only way to build wealth. Many successful people started with little and grew their wealth through smart financial decisions, education, and perseverance.

[Just Ivy Africa @JustIvyAfrica]

8. I'm Too Young to Worry About Finances.

Thinking that financial planning is only for older adults can lead to missed opportunities for early wealth-building. MMFs and their compounding nature when started early can create great wealth.

[KIRYOWA N JAMILA @Jamilakiryowa]

@Enock_82N @i_nuwasasira @KK_Mellon @SolomonSerwanjj Also means the daily interest are reinvested daily (your interest earning interest daily).

[KIRYOWA N JAMILA @Jamilakiryowa]

@Enock_82N @i_nuwasasira @KK_Mellon @SolomonSerwanjj Compounding interest is daily. Interest generated today will be reinvested the following day together with your principal meaning everyday you will have a new principal(day's principal+previous day interest).

[Kamoga Pai @TheInsuranceG_y]

But do Slay Queens buy #Insurance? Just seen a nice beautiful brown lady looking fresh at some hospital, I was mesmerised but then in my mind I was like may be her closing balance in a #UnitTrustFund is about half a billion shs or may be she has already planned for #retirement

[Ian Rumanyika @irumanyika]

From Robin Sharma ✍🏿

I’m thinking about habits as we start 2024. I’d like you to consider adopting these in the new year:

1. Rise with the sun and spend at least an hour praying, reading and running. Your days will never be the same!

2. Go complaint-free for a week. [You’ll feel so much stronger and better].

3. Stop focusing on the faults of people and, instead, seek to amplify their strengths. Simple idea yet practiced rarely in today’s society.

4. Walk for an hour every day. Period.

5. Read for an hour each evening.

6. Be the most prepared person at every meeting you attend.

7. Outwork everyone in your industry. Always giving your best effort breeds tremendous self-respect.

8. Make deep sleep a priority.

[KIRYOWA N JAMILA @Jamilakiryowa]

@BMukurasi @KakandeAlex TBonds only give a better net ROI ie 10years + in the first years.
TBonds only give a better net ROI if you reinvest your couponsin the later years. Otw due to the daily compounded interest nature of the UFTs same amount will surpass what the TB gives in 10,15,20 years.

[KIRYOWA N JAMILA @Jamilakiryowa]

@PamSi1 @julius_warugaba @thewebb88 @SpireJim @PoliceUg I think the question for counsel @julius_warugaba should be what did @CmaUganda do when it realized it was a fraud after its supporting agencies like @PoliceUg @URSBHQ had already fallen short and participated? Which measures did it take to save investor's money?

[KIRYOWA N JAMILA @Jamilakiryowa]

@SpireJim @PoliceUg @CmaUganda @ThefiaU @CIDU @polic

[KIRYOWA N JAMILA @Jamilakiryowa]

@SpireJim @PoliceUg @CmaUganda @cidug @fia @fia

[KIRYOWA N JAMILA @Jamilakiryowa]

@SpireJim @PoliceUg @CmaUganda @cidug @fia

[KIRYOWA N JAMILA @Jamilakiryowa]

@NadiaLuyiga @SpireJim @PoliceUg & it's heavily advertising now. But are these Uganda media houses on a heist???? Where's @CmaUganda

[KIRYOWA N JAMILA @Jamilakiryowa]

@DieticianProssy @nbstv @victor_tayebwa #lazyjournalism #doublestandards media houses are not any different from tabloid journalism late, their information should be digested with a pinch of salt. 1m for 10m in a month????! As if uncut

[KIRYOWA N JAMILA @Jamilakiryowa]

@KaalAlice @nbstv @victor_tayebwa Its just telling of the information on media houses. #doublestandards #fakenews #lazyjournalism #nbs