Personal Finance: How to lower your energy cost drastically

Energy cost forms a substantial part of the operating costs of most businesses in Nigeria.  Many organizations have to rely on power generating sets in the face of erratic power supply from public power distribution companies. Even if there is steady power supply from public power distribution companies, there is need for prudence on energy consumption, because it comes at a cost. And if care is not taken, energy cost could eat deep into the bottom-line of company.

If you have been battling with huge energy cost, you have to worry less as these tips would bring down the money you spend on powering your operations:

Go for energy-saving appliances

The kind of appliances you use would determine your energy consumption. Many companies procure electric products without being mindful of the energy they consume. Energy-saving appliances are energy efficient and will save you a considerable amount of money in energy costs compared to standard models. So make sure all of the office appliances are energy-saving to ensure you don’t miss out on easy savings.

Switch off the lights when not in use

Leaving a light on will always consume more energy than turning it on and off, especially if you are metred be it pre-paid or post-paid. If the bulb is on, it is using electricity, and if it’s off, it isn’t — it’s as simple as that. A light bulb doesn’t use extra electricity turning itself back on. Instead of leaving a light on in an empty conference room, make it a habit to turn off your lights when not in use. Using natural light during the day time will reduce the amount of energy you use each day.

Unplug all electronics not in use

It is a good habit to switch off TVs, monitors, printers, etc. when not in use, but these electronics continue to suck power when they are off in “standby power” that allows the device to power up quickly when you turn it back on. Always unplug electronic appliances when not in use to avoid this hidden energy consumption.

LED bulbs are a smart investment.

When LED bulbs first appeared, they were significantly more expensive than a standard incandescent bulb – sometimes even costing up to three times conventional bulbs. But now, most LED bulbs cost less. Studies have shown that LED bulbs are up to 10 times more energy efficient and last up to 50 times longer than the incandescent bulbs. So, it is wise you go for LED light bulbs as they would help reduce your energy cost significantly.

Upgrading older equipment is worth the cost.

Sometimes the initial upfront cost of replacing old equipment can deter owners and managers from investing in newer technology. This is a mistake. By investing in new, more energy efficient technology you will, over time, save money through energy cost savings.

Upgrade to LCD screens.

There are numerous reasons to upgrade old CRT monitors to LCD screens. Improved image contrast, smaller size and reduced eye strain are all substantial benefits to employees. But in addition to these benefits, LCD screens average half to two-thirds the energy consumption of those CRT monitors. This increased energy efficiency will yield a significant savings each month.

Install occupancy sensors.

Occupancy sensors detect the motion of a room’s occupants and adjust the lighting accordingly to make sure that you are only using energy when you need to. Turning off lights in unoccupied areas and rooms allows you to not only cut out unnecessary energy usage, but extends the life of lightbulbs leading to reduced maintenance costs as well.

By learning more about efficient energy usage and correcting past mistakes, you will be able to significantly reduce your energy consumption and increase your monthly savings on your energy bill.

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Counseling:

Overcoming stress at work

The pressure to meet a deadline or to fulfill a challenging obligation wears a lot of people out. They are soon broken down by stress. And when work stress becomes chronic, it can be overwhelming — and injurious to both physical and emotional health.

Stress has a way of impeding productivity. A 2013 survey by American Psychological Association’s (APA) Center for Organizational Excellence found that job-related stress is a serious issue.

Sources of work-related stress

Some of the causes of work-related stress are: Low salaries,excessive workloads, few opportunities for growth or advancement and work that isn’t engaging or challenging. Other sources of stress could be lack of social support, not having enough control over job-related decisions, conflicting demands and unclear performance expectations.

Repercussion of uncontrolled stress

Unfortunately, work-related stress doesn’t just disappear when you head home for the day. When stress persists, it can take a toll on your health and well-being.

In the short term, a stressful work environment can contribute to problems such as headache, stomachache, sleep disturbances, short temper and difficulty concentrating. Chronic stress can result in anxiety, insomnia, high blood pressure and a weakened immune system. It can also contribute to health conditions such as depression, obesity and heart disease. Compounding the problem, people who experience excessive stress often deal with it in unhealthy ways such as overeating, eating unhealthy foods, smoking cigarettes or abusing drugs and alcohol.

How to tackle work-related stress

Track your stressors

Keep a journal for a week or two to identify which situations create the most stress and how you respond to them. Record your thoughts, feelings and information about the environment, including the people and circumstances involved; the physical setting and how you reacted.

Notes taking can help you find patterns among your stressors and your reactions to them.Develop healthy responses. Instead of attempting to fight stress with fast food or alcohol, do your best to make healthy choices when you feel the tension rise. Exercise is a great stress-buster. Any form of physical activity is beneficial. Also make time for hobbies and favorite activities. Whether it’s reading a novel, going to concerts or playing games with your family, make sure to set aside time for the things that bring you pleasure.

Take get the necessary rest

Getting enough good-quality sleep is also important for effective stress management. Build healthy sleep habits by limiting your caffeine intake late in the day and minimizing stimulating activities, such as computer and television use, at night.

Establish boundaries

In today’s digital world, it’s easy to feel pressure to be available 24 hours a day. Establish some work-life boundaries for yourself. That might mean making a rule not to check email from home in the evening, or not answering the phone during dinner. Although people have different preferences when it comes to how much they blend their work and home life, creating some clear boundaries between these realms can reduce the potential for work-life conflict and the stress that goes with it.

Take time to recharge

To avoid the negative effects of chronic stress and burnout, we need time to replenish and return to our pre-stress level of functioning. This recovery process requires “switching off” from work by having periods of time when you are neither engaging in work-related activities, nor thinking about work. That’s why it’s critical that you disconnect from time to time, in a way that fits your needs and preferences. Don’t let your vacation days go to waste. When possible, take time off to relax and unwind, so you come back to work feeling reinvigorated and ready to perform at your best. When you’re not able to take time off, get a quick boost by turning off your smartphone and focusing your attention on non-work activities for a while.

Learn how to relax

Techniques such as meditation, deep breathing exercises and mindfulness (a state in which you actively observe present experiences and thoughts without judging them) can help melt away stress. Start by taking a few minutes each day to focus on a simple activity like breathing, walking or enjoying a meal. The skill of being able to focus purposefully on a single activity without distraction will get stronger with practice and you’ll find that you can apply it to many different aspects of your life.

Discuss with your boss

Healthy employees are typically more productive, so your boss has an incentive to create a work environment that promotes employee well-being. Start by having an open conversation with your supervisor. The purpose of this isn’t to lay out a list of complaints, but rather to come up with an effective plan for managing the stressors you’ve identified, so you can perform at your best on the job. While some parts of the plan may be designed to help you improve your skills in areas such as time management, other elements might include identifying employer-sponsored wellness resources you can tap into, clarifying what’s expected of you, getting necessary resources or support from colleagues, enriching your job to include more challenging or meaningful tasks, or making changes to your physical workspace to make it more comfortable and reduce strain.

Get some support

Accepting help from trusted friends and family members can improve your ability to manage stress. If you continue to feel overwhelmed by work stress, you may want to talk to a psychologist, who can help you better manage stress and change unhealthy behavior.

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How credit rating downgrade could impacts your investments

Listed companies are scrutinized by credit rating agencies who grade them after considering their financials, corporate governance and other related issues. These agencies also grade countries, which impact their sovereign bonds and organizations which operate there. Rating agencies like Moody’s, Fitch, S&P, CRISIL etc from time to time release their ratings of different corporate organizations and countries. These ratings determine the rate at which these countries and companies could borrow money internationally.

A ratings downgrade indicates that the company has weak financials. It may be best to avoid such firms.One of the key reasons why companies face credit ratings downgrade is because of their deteriorating finances, usually high debt levels. It indicates that the company may not be able to service its debt as per schedule or, in some cases, may even default.

“While the ownership structure provides comfort, the risk on additional tier-I bonds has increased. The bank may not be able to service the interest on these bonds, in accordance with the stated terms, if it continues to be in violation of regulatory capital requirements,” says KarthikSrinivasan, Senior VP and Group Head, Financial Sector Ratings, ICRA.

Typically, limited improvement in a company’s cash flows that’s riddled with debt leads to downgrades. Not just banks, the same standard applies to capital-intensive and commodity-driven sectors like thermal power, steel, construction, infrastructure and mid-sized telecom entities.

If a company is not mindful of key ratios such as incremental Return on Capital Employed (RoCE) or incremental Return on Assets (RoA) for investment decisions and not initiating action to recover dues in time may lead to downgrades. Higher ICR reflects a higher ability to service debt.

How does it impact companies

A ratings downgrade hampers the company’s ability to borrow. Lenders may hesitate loaning to such companies and may not even roll-over (refinance) existing debt.  This could later impede the future growth plans of the company.  The cost of borrowing also increases for such companies because investors seek higher returns for the additional risk they take.

“To get funds from investors at more attractive rates, these companies need to improve their operational and financial matrices,” says Srinivasan. If the company does not take quick corrective action, it may face further downgrades.

How downgrades impact you

Usually, a rating downgrade is immediately followed by a fall in the company’s stock price, impacting your equity investments in the short run. Even your debt mutual fund investments can be adversely impacted.

“Investors in debt instruments that witness a sudden and sharp downgrade will be faced with losses due to the fall in their prices because of the downgrade,” says SomasekharVemuri, Senior Director, CRISIL Ratings.

What you should do

A ratings downgrade is an alarm bell. You need to wake up and take corrective action. However, do not worry if there’s just been one downgrade. “A series of downgrades is a cause for concern, not a single downgrade,” says Deepak Jasani, Head, Retail Research, India’s HDFC Securities. Pay close attention to the recent credit ratings of a bank or a company and also its future outlook, which is given in the rating notes by agencies.

It is an indicator of the likely direction in which the company’s rating is expected to move. For instance, all long-term ratings from CRISIL carry an outlook which gives the likely direction in which the rating is expected to move in the next 12-18 months.

In order to take corrective action, go through the explanation provided by the company in response to its rating downgrade. Will the company be able to honour its promises, within the stipulated time frame? If you think the measures announced are unrealistic, you may exit your investments once the prices recover, after the initial knee-jerk reaction to a downgrade.

If you are a debt mutual fund investor, keep an eye on the ratings of the debt investments made by the fund house. You may check it once every three months. “In case, the exposure to bonds rated below AAA or even AA+ is rising, you should check the pedigree of the companies in which the fund has invested,” suggests Jasani. If the fund’s exposure to lower-rated companies is high, it is advisable to exit the fund.

How to anticipate a downgrade

“If the rating outlook is negative, typically the ratings are likely to be downgraded further,” says Srinivasan. You should also do your own research. For instance, in the case of a bank, find out its non-performing asset (NPA) levels or bad loans. If, compared to peers, its NPAs have been rising, chances are it could face further downgrades.

In the case of a company, pay close attention to its debt equity (DE) and interest coverage ratios (ICR). The DE ratio indicates the proportion of the company’s assets that are being financed through debt, while the ICR indicates the ability of a firm to service the debt and repay it as per schedule. A DE ratio of one is considered optimal. While the higher the ICR, the better is the ability of a borrower to service debt.

“Be careful of betting on highly leveraged stocks on the expectation of a turnaround. In majority of the cases, this turnaround never happens or happens after the investors lose patience and exit,” says Jasani.

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Finance 101:

Beta

Beta is a numeric value that measures the fluctuations of a stock to changes in the overall stock market.

Beta measures the responsiveness of a stock’s price to changes in the overall stock market. On comparison of the benchmark index for e.g. NSE Nifty to a particular stock returns, a pattern develops that shows the stock’s openness to the market risk. This helps the investor to decide whether he wants to go for the riskier stock that is highly correlated with the market.

For example, if a stock’s beta value is 1.3, it means, theoretically this stock is 30% more volatile than the market. Beta calculation is done by regression analysis which shows security’s response with that of the market.

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Quote:

“There’s no magic like the magic of the written words.”—Laura Bush, former United States’ first lady