INTRODUCTION TO INVESTMENT IN STOCKS:
‘Train up a child in the way he should go; and when he is old, he will not depart from it- proverbs’. Proverbs 22:6
This age-long counsel from the wisest king that ever lived is relevant today, just as it was when it was first said. We live in a changing, highly competitive world where docility and parochialism can only leave those who dwell therein at the bottom of the ladder of life. Versatility and high mobility are key ingredients of survival in this and the coming age. The early these habits are imbibed the better.
Academically, there was a period when just a primary school leaving certificate will suffice but nay, in the new age, the minimum required certificate to compete is a Masters degree. Gone are the days, when obtaining good grades in excellent course of study from a good school was enough to get on in life, in our days and in days ahead, these are and will remain just the basic. A critical factor in the process of movement from poverty to prosperity is the understanding of work, business and investment in addition to other relative money making skills.
In this discussion, more so as the year 2018 is just a few weeks’ old, let us look at one critical investment platform there is and that can help you become a wealthy adult. It is an investment in the stock market. First, the followings are the reasons you need to understand the stock market.
Meanwhile, investment in the stock market is simply a process where you though a kid can become a co-owner in the companies where mum, dad or both works. Is that not fantastic? Oh yes, It is.
OK! Let me ask you, Do your parents work in any of the following companies? First bank, Wema, UBA, Zenith, Access or any of the banks around? Investment in stocks gives you an opportunity to own a part of any of these banks. It could also be that your mum or dad works in Oando, Mobil now known as Double One, Conoil or Total? You can just with your little savings become an owner.
But why is this kind of investment advisable at an early stage of life like yours? I will tell you.
- Investment in stocks is risky in the short term whereas, time wipes off the risk element thereby making the investment profitable forever. Guess what? As a kid today, you have lots of time to wait for the maturation of investment in stocks and in the process, wiping off all possible risks and thus make you very rich.
- Investment in stocks requires time to grow, particularly in price. For example, I knew when the stock of Nigerian Breweries was selling for N10 per share, the same stock is selling for above N100 today but hey, and the time difference was twenty years. Please note that some stocks are selling for fifty kobo today and might remain so for another five years but going forward, those stocks might rise to prices above N10. It’s all about time. As a kid today, you sure have the time to wait.
- When you buy stocks, you help mum and dad retain their employments. At that, they earn salaries to sustain the home.
- Stock investments offer you three kinds of returns which are cash dividend, additional free shares called bonus and price appreciations. Don’t worry. We will spend time to later talk about these.
- When you buy stocks as a kid, you can accumulate money to help the family out in case dad or mum becomes broke along the line. You see, sometimes, dad or mum’s business might not do well to cater for increasing needs of the family. Mum and dad might be working somewhere and later loses their jobs, what do you think will happen to the family? The stock market is such a place where you can save and help the family out in times of unforeseen needs of financial challenges.
- You might want to but some of the things you need and mum or dad doesn’t have money enough at that immediate period, you can sell some of your stocks and buy and when you have money again, you simply buy the stocks you sold back.
- Investing in stocks gives compound interest. Ask mummy or daddy what a compound interest is. I will like to know your response. Send me a mail at email@example.com
I will talk to you again next week. Take care and be a forward looking kid.