INVESTING WISELY: Between fixed income securities and stocks

Deciding how to preserve or appreciate capital can be a tough one, especially in an economy struggling to hold its grips as Nigeria. While this is not completely a Nigerian thingy, nationals of a few foreign countries (U.S., Singapore, Sweden, Japan) seem to be winning the war through efforts and initiatives that have led to their wide understanding of fixed income securities and stocks options.

With a lot to benefit from by venturing into either of these financial instruments, Nigeria, till date, records low participation, courtesy of the poor level orientation around both financial vehicles.

When Chaka launched its ambition to improve the level of appreciation of stock, and how citizens access both local and foreign stocks, the huge gap in the industry became apparent. It was, until then, did we realised that a high number of prospects who should have taken advantage of the money market to create wealth, knew close to nothing about such opportunities.

The realities was quite appealing, as only a few persons described as “elites” in the society were familiar with this wealth creation models.

Although, stock can be a long term investment, fixed income securities on the other hand have proven to be another safe and secured investment vehicle for anyone seeking to create wealth within a shorter period.

Understanding fixed income securities
In perspectives, fixed income securities are used by governments and corporate organisations to loan money from citizens, often time to finance projects on a short-term or long-term basis. This way, investors (lenders) can get their capital upon maturity and accrue interest over a stipulated period. An examples include bonds, treasury bills and other commercial papers.

Understanding stocks

Stocks basically represent ownership equity in a firm. For a listed company, its stocks are owned by investors who had earlier bought shares at a value for returns should they appreciate. Unlike fixed income securities with low level of risk, risk level for stock is high.

Choosing between fixed income securities and stocks

Financial experts often advise persons seeking for a long term investment to consider stocks while those looking for short term investment to venture into fixed income securities. Given the security level of fixed income instruments, individuals investing to preserve capital can opt for the financial vehicle in place of stocks. However, stocks have proven to be more creator of wealth, thanks to its volatility.

Measures to consider when investing in stocks

To invest wisely, financial experts consider a few metrics such as industrial trends and market history. For instance, the coronavirus pandemic has opened the world to appreciate medics and pharmacists. Players in these industries have been at the center. Aside combating the war, they are about the highest paid.

This reality is enough to inform investors to invest in these industries for a massive return on investment. An experienced stock market investor will diversify his portfolio into pharmaceutical companies listed on the stock exchange.

In context, anyone on Chaka can search local or foreign companies offering stocks within the medics to invest for a profitable return.

Conclusion

While the economy continues to struggle to be stable, individuals can venture into both fixed income securities and stocks to preserve or grow money, especially with the use of Chaka as an investment passport.