Thursday, April 8, 2010


Investment is the use of money for future profit. It is also something in which money is invested into. In reality, investments are made in organizing business seminars, professional trading sessions, workshops from which returns on investment (ROI) is expected. Other types of investment are buying stocks and shares, bank savings on which interest accrue, real estates, entrepreneurship business startups, internet businesses such as HYIP, forex trading, fixed odds, etc. These categories of investment involve monetary risk, as all capital invested may be lost. To avoid this, the investor needs to do the following.

  • Preliminary Investigation: For success, the investor must display a good sense of preliminary investigation in knowing the nitty-gritty of what breeds success in investments undertaken by people, generally. It is discovered that, it is either the investor had never been a good mixer-who doesn’t belong to any club, does not attend social functions, like speakers, presenters or business for a, doesn’t socialize and doesn’t even watch news or read newspaper for worthwhile business information. Also, many would-be investors do not take the pains to make inquiries about the feasibility or otherwise of their intended investment plans. Thus, even when information is provided, some investors get blinded by the greed of immediate gains.
  • Information as Tool of Analysis: For any meaningful success in investment, investors must first be able to use information as tool of analysis to decide which investment type best suits their needs; is it real estate, insurance, stocks and shares, money market instrument like fixed deposit, etc. They could as well meet with known investment experts who can give candid advice on the investment platform they are interested in.
  • Take Action: Having got useful hints about the viability of an investment instrument, the investor can then take action, having also investigated investment institution and becoming satisfied that it is genuine, and will deliver. Where the aspect of preliminary inquiry and investigation based on information, are not carried out, the investor is much likely to lose invested capital owning to failure of the investment platform or he falls prey to fraudsters.
  • Confirm The Investment Conditions/Terms: Mr. A, an investor got interested in stocks and shares. So, he approached Mr. B who is a stockbroker. Upon inquiring about the modalities for acquiring shares in the secondary market, he was informed that he needed to first open a Central Securities Clearing System (CSCS) account with N150,000 before he could begin to buy shares, which may not be more than N20,000. Mr. A got alarmed and sought the views of other business associates to know the true position. Investigations revealed that opening a CSCS account is not, in any way, a precondition for obtaining shares and stocks, via public offer (in the primary market). It was also discovered that it is not true that one opens a CSCS account with any amount of money let alone N150,000. The CSCS only functions as a safety-valve and clearing house of the NSE. It issues statements of accounts and carries out share-holding documentation for investors. It also helps to prevent fraudulent activities on the stock exchange by maintaining a central accounting and computerized control system, for monitoring stockholders account and adequately keeping track of all transactions. Thus, anyone who is interested in stocks and shares should first find trustworthy stockbrokers who would guide and manage their stocks portfolio for them, effectively.

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