Equities are some of the ways to make from little to huge investments and get returns in investment. investing in equities entails capitalising a certain amount of money in shares and have that money work for you so that you can fully reap the rewards of your labor in the future. One of the best instrument is a good and informed broker.
There are several reasons investment or savings culture is encouraged. Apart from creating or increasing wealth, investing is a means to a happier ending. It was Warren Buffett who defined investment as “the process of laying out money now to receive more money in the future.” Many factors attract people to making savings in equities.
For the managing director of Lancelot Ventures Limited, Mr Adebayo Adeleke, it takes knowledge and cash to invest in the capital market. What that mean is that an investor must have a knowledge of the stock market no matter how little it is and also finance is important.
Experiences have shown that people get attracted to equity market as a result of its ease of access, low capital requirements and liquidity. The advice is that investors put their investments in the stock market for value, just like other investment, nobody wants to lose money. The focus should be how to make hay while it shines.
An equity investment is money that is invested in a company by purchasing shares of that company in the stock market. These shares are typically traded on a stock exchange. The main benefit from an equity investment is the possibility to increase the value of the principal amount invested. This comes in the form of capital gains and dividends. An equity fund offers investors a diversified investment option typically for a minimum initial investment amount.
Different companies have different ways of paying dividends. The fundamentals are the key considerations, earnings per share (EPS), return on investment (ROI), Net Book Value, dividend history, low level gearing, sustainable business line, remarkable market share, good gross margin, stable and credible management and board among others.
“The dividend I received from the companies I invested in is mostly reinvested, meaning that I used it to buy more shares. Every business has its own risks, for equities market ignorance of market dynamics can make an investor to lose money.
A banker, Tope Oye stated that she is a small investor, although I started with N20,000 from my salary in 2017, and gradually I built on my portfolio by buying more.”
Many people put off investing because they think investing in stock market needs a lot of money to start. But this may not be true. Mrs Oye said “you can just start your investment with as little as N10,000 per month. The key to create wealth is developing good habits like regularly investing small amount in share market every month. If you make a habit of investing regularly you will be in a much stronger financial position in the future.”
She said that “I decide on how I want to invest in stocks, know your goal for investment, open an investing account with a stockbroking house, set a budget for my stock investment and learn about stock market basics.”
She also said “I was attracted to the stock market because of easy to sell. My capital cannot be tired down. Also, market gives high return, although it is risky.”
According to her, most of the time I invest in penny stocks because I have no capital or stocks that are trading below N10, with good fundamental. I am a long-time investor, I collect my dividend, and I may either save or spend.
Risks in investing, Oye said that “Many people know they should be investing, but fear of loss keeps many from participating in the markets. After all, nobody wants to lose their hard-earned money, and we often hear warnings about how poor investment decisions can lead to significant losses in the stock market.
“However, building wealth on equity market does not have to be scary. Although there are market risks, they can be overcome. Even the biggest risks of investing; volatility, timing, and overconfidence can be sidestepped as long as we know they exist and take an active stance on combating them.”
Founder of Tradelines DotBiz Investment Limited, Mr Tunde Jeariogbe, an investor on the Nigerian Exchange Limited said investing in equities takes interest and capital.
For effective investment, one is expected to familiarise yourself with economic news, developments in the sector and the company you are putting your money. One has to know how the stock market works. “More importantly, you can invest in technical analysis of the equities market training. At that point you will be more than ready to invest.”
“I love to invest every loose money with me, money that I can give out as a dash, sometimes I play games with money meant for some projects but not enough for the project. Sometimes I get locked up, sometimes I am able to build the money. But for my little research firm, we mostly target dividend and capital appreciation. I hardly reinvest my dividend, there is always a need standing that the dividend will take care of. But I still look forward to that day when I will have to reinvest dividends, since this is the ideal thing to do,” he said.
Investment, whether in equities, real estate or anywhere is associated with risks as it has potential for wealth creation. Most times, the risks scare potential investors away from putting their funds in the most profitable businesses. “The risk of losing the investment when time is against you, the risk of staying in a stock longer than you planned, especially when the company tailed to meet investors’ expectations. Aside these two risks the stock market is a place to be,” Jeariogbe LEADERSHIP.