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Published On: Sun, Nov 5th, 2017

Personal Finance: Strategies for making good investment

Investments

After the 2008-2009 consolidation in the banking sectors, there was a massive boom in the Nigerian Stock Market. This made a lot of people to invest in stocks. But not long thereafter, many of them lost their investments, because they were ill-prepared before dabbling into the market. To avoid making some of the mistakes you have to take heeds to some of these admonition before you invest in shares:

Seek advice

Working with a qualified financial adviser is one way to make a real difference to your wealth. An adviser can help you shape your investment goals and strategies and provide peace of mind when markets become more volatile. There are many investment bankers around who could be of help to you.

Educate yourself

Education they say is power. An informed investor is a good investor. So, be abreast with the happenings in the financial market. Get analysts’ reports on the shares you are planning to buy. Issues like changes to interest rates, currency movements and any geopolitical issues that have the potential to move markets must be of interest to you.

Keep an eye on fees

The fees you pay will affect the return you achieve from your investments. So make it your business to understand the fees you are paying on your investment as well as the fees you pay to your adviser. This little money often adds up to be substantial amount if you don’t keep tab on it.

Consider the impact of forex on your portfolio

Currency movements can have a significant impact on your overall return, both positively and negatively. Whether you choose to hedge your currency exposure will depend on your view of how the value of the currencies to which you are exposed will move. Some investors wish to be exposed to currency movements and others don’t. What is important is to work out which camp you are in and structure your investments accordingly.

Set your investment timeframe

It is easy to be caught up in short-term market moves. And if you like to trade assets on a short-term basis it’s important to keep a close eye on what is happening in markets at all times. But if you have a long-term view, avoid basing investment decisions on what is happening in markets right now. You should be concerned about long-term factors.

Buy when prices are down

Sometimes, it is a prudent strategy to buy quality stocks when their values are depressed because of short-term issues affecting the price of the stock. This can be a great time to buy. But make sure the business is not in a sector experiencing structural decline, satisfy yourself the problems are of a short-term nature only and make sure the business has the potential for long-term growth.

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