Taking Wise Investment Decisions

Experience has shown that many people do not get their autecedents right when it comes to financial planning. However, some persons have now realised the need to prepare financially for the future, but they have failed to acknowledge the importance of long term investments.

Surprisingly, those who have practical knowledge of financial management simply save money without adequate investments. It is doubtful if what they spend as money are profitable ventures.

Many end up expending their savings and get into arduousness when it is rainy day.

Apart from acquiring funds through the development of a sound savings and investment culture, individuals and culture, individuals and organisation’s can raise money at some point for different reasons. For instance, a company quoted on the Nigerian Stock Exchange to raise funds from the capital market for the purposes of re-capitalisation, project financing, debt servicing, among others, into new areas of business.

In undertaking this task, the company must have done some estimates well enough to embolden the capital market and its investors that such steps would yield some dividends and would ultimately result in success for the organizers. It was for this reason, Godswill Nwese, a financial expert based in Port Harcourt said that:

“The Stock Exchange, daunts any expenditure that will stunt the budget and hamper the objective of the funds. No wonder the NSE discourages an ever-stretched budget on publicity, and other sundry necessities capable of hampering the target of the money being raised”.

For individuals as in corporate bodies, the case is not different as money can be raised through informal contribution, co-operative society, bank savings, account, trade association welfare arrangement, religious and social associations. These efforts to acquire and plan one’s finances inform of co-operative actions have existed informally for sometime.

Mr. Anthony Dappa, an accountant, claimed that “informal co-operative actions had been in existence for long involving the pooling of resources, often meager, in an effort to obtained what is needed by members but which cannot be obtained by the use of an individual’s resources or efforts”.

There are many ways funds can be raised particularly in traditional societies. The ways include mutual aid or assistance. Such assistance comes in the form of child birth, deaths, naming ceremonies, among others. It was common to secure any kind of assistance from neighbours in the traditional societies.

There are also forms of traditional co-operatives which are demonstrated in savings and lending or joint possession of land. This creates access for the individual’s money. Mr. Ibifubara Tyger, a financial expert says.

“Low priority in finance management results from ignorance by the people to think assets, not liability”.

This means that funds should be raised not primarily to save or spend on frivolities but to invest. We have to be more asset-minded when we make substantial money not liability-minded. The error many commit is to acquire liabilities in the guise of assets.

For instance, when someone saves money over a period of time and it is used in purchase of a car not designed for commercial transportation, the car is a liability.

This nation operates an economy which prompts everyone to have a stable source of income in order to live comfortably. So it is expedient that workers adopt delayed gratification style in their choice of what to do with the lump sum of money they realise.

Mr. Moses Inowa, a trader, who deals in shoes and men’s wears in Port Harcourt, recounted his experience saying:

“I belong to a trade association that helps me gather N10,000 every two months by contributing some amounts of my earnings with some other traders in the market place”. This translates to N160,000 for Inowa.

Inowa was happy that over a period of time he had been able to open a provision/cosmetic shop in the old township axis. It had also enabled him to purchase a piece of land at Mile four, Diobu area and improved his standard of  living. He now owns a truck which enables him to transport the items he trades in with ease.

But, the level of comfort Inowa sought to provide might diminish with time if he failed to invest properly. Everyone has to invest properly in areas that are beneficial in future when it may no longer be possible to work as hard.

Many businessmen or women and workers gather money but lack the understanding that it should be re-invested to bring a greater yield. One has to be sure that investment decision are taken wisely by consulting professionals. Those who seek to invest in the capital market will have to consult stock brokers.

Arnold Alalibo