”Today people who hold cash equivalents feel comfortable. They shouldn’t. they have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value” warren Buffett.
Investing is a way to increase the amount of money you have by putting it into financial products ranging from bank account, money market accounts, stocks, bonds, precious stones and properties. There are different types of investments which include but are not limited to growth investment, shares, property, defensive investments, cash investment and fixed investment. Investments are generally a brilliant idea, but not many people pay enough attention to it. There are a number of reasons why people do not invest, and they all sum up to not being properly informed. Luckily that is what this post is about, educating you on investments specifically to shares investment.
Shares are units of ownership interest in a corporation, and can be acquired by;
Subscription, this is the signing of the memorandum of association of a company during incorporation whereby at least one share is taken by a member signing.
Allotment, this is the allocation of a specific number of shares of a company to a person upon application.
Transfer, this is where the shares and interest of a member in a company is transferred subject to the company’s articles it can be done by way of sale
Transmission, this happens upon the death of a shareholder his shares are now vested in his legal personal representative or survivors.
Investing in shares is another means of earning money outside your regular source of income and with Nigeria’s economy, we all need that extra cash. There are a range of potential companies to invest in, and one which was recently listed in the Nigerian Stock Exchange Market is the MTN Nigeria shares. MTN Group Limited formally M-Cell, is a South African multinational mobile telecommunications company, operating in many African, European and Asian countries, having Its head office in Johannesburg.
The Nigerian Stock Exchange has approved the listing of MTN Nigeria shares on the nation’s bourse. Barring unforeseen circumstances MTN would be listing a total of 20,354,513,050 shares at N90 per share. NAN reported that MTN Nigeria shares would emerge the second largest company on the nation’s bourse after Dangote Cement, with a market capitalization of N1.83tn.
There are a number of benefits investing in shares, they include
- Potential capital gains from owning an asset that can grow in value over time, and can be inherited.
- Potential income from dividends
- Lower tax rate on long-term capital gains
- By nature, shares that are listed are very liquid product and can be bought and sold quickly over exchange platforms
- Some listed shareholder companies from different market sectors offer lavish discount to shareholders when they buy goods or services from the companies or their affiliates.
Although the advantages of shares investments are juicy, they are equally risky, and it is only fair that we list out the disadvantages as well, to enable you make an informed decision on shares investment.
- The dividends are not fixed nor controllable
- It has a high risk
- Fluctuation in market price
- Residual claim
- Financial loss
It is important to understand that life in general is about taking risks, and business is not an exception, and the biggest risk is not taking any risk at all. Ultimately what you have to do before investing is making adequate research on what you are investing in, to know what you are getting yourself into or get the assistance of a broker, they help with financial advice on investing and can help with the whole process from start to finish. If you still have doubts in investing, I would leave you with these words. A ship in harbour is safe, but that is not what ships are built for.