Opportunities in the securities exchange

  

Date Posted: 10/1/2012 3:01:32 PM

Posted By: moff J  Membership Level: Silver  Total Points: 485

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It is the dream of everyone to at one point in their lives have money work for them, rather than work for the money. Identifying the appropriate means through which to get to that end is what becomes an uphill task to many people.
A look at a perspective where one has a sum of money, whatever the amount, and seeks to find an appropriate way of earning a return from that money. One thing which has to be emphasized at this juncture is that a coin in a portfolio earning a return of 2%, for example, is worth more than a coin lying idle because the owner is too afraid to take a risk. The wealthiest people the world over attained their riches because they were willing to take a risk and many a times there is a trade-off between risk and investment, such that high risks translate to high returns.
For instance Warren Buffet, the great stock market investment magnate, earned his place in history because he was willing to take extraordinary risks.
Therefore everyone has the prerogative of deciding what to do with their finances and the purpose of this essay is to give you a glimpse of a number investment opportunities available in Kenya and give the push to not let your money stale by being held while it can earn you a return.

First is investing in shares of companies. The Nairobi Securities Exchange (NSE) offers everyone an opportunity to own a share in a number of companies that are listed in the company. Buying shares of a company earns an investor a return in the form of dividends and capital gains. When one is buying the shares of a company, they have to do their research thoroughly. A number of factors affect the share prices

such as the management, macro-economic forces, expansion plans, and dividend policy. Many people get frustrated by the stock market because they do not do their research properly and hasten their decisions thereby end up making the wrong decisions.
The good thing with this investment opportunity is that it is affordable because the minimum amount needed to invest is quite low.

The second investment opportunity is the government securities. The government, through the Central Bank, offers various tools such as treasury bills, and treasury bonds for purchase by the public. These securities are less risky because they have predetermined rates of return and the possibility of default is very low, if it is there.
The main drawback of these securities is that they require a substantial sum of minimum investment which could be out of reach by many people. Some also have interest rates which are not adjusted with changes in inflation. The real rate therefore may even become negative when inflation rate rises which makes such an investment unattractive.

The last investment opportunity that is to be discussed here is the debt instrument. These instruments include corporate bonds and debentures. These carry a high rate of return and they also require a huge amount of money for investment. The other main advantage is that they may be secured by assets of the borrowing entity which means default is highly unlikely.

In conclusion, the above is just a short description of some of the available investment opportunities. There are indeed many other opportunities which need exploitation. Many people have brilliant ideas which could be used to improve the welfare of the society and as one great business manager said you do not have to worry as to whether your idea will work or not, what matters is that once you incubate the idea in your mind, and then imagine it making a difference in the world, then it works; So go ahead and pursue it.

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