WHAT YOU SHOULD KNOW BEFORE INVESTING YOUR MONEY

Have you ever thought of investing your money into a particular company or companies with the hope future gains? This is a pretty good idea as it provides you the assurance that your future will be bright from the return obtained suppose the stocks work out positively in your favor. I have noticed that many investors prefer to invest in companies which have been listed in the stock exchange.

What is the reason behind this? Actually this is because these listed companies are constantly monitored and regulated by independent boards, for instance the Security Exchange Commission in the United States. In Kenya, the role is undertaken by the Capital Market Authority which ensures that the investor’s rights are protected against unscrupulous egocentric individuals who may decide to give themselves immense compensation emanating from the earnings or profits.

 As an upcoming investor, it is critical and prudent to identify the type of company you want to channel your funds after a proper scrutiny. You will notice there are instances where some “pyramid schemes” have emerged and many investors have been caught up in the stampede to get quick money and returns.

After a relatively short span of time, they experience the shock of their life to realize that the scheme was a ploy formulated and its ripples effect is that the money you had invested instantly vanishes in thin air. This is unfortunate and thus before you opt to invest, it would be good if you consider prudence, as they say be quick to listen but keen when taking some action.

Some of the questions should be lingering in your mind before you think of investing; what is the past, current and the expected future performance of the company, has it registered significant performance for the last three consecutive years and what are its projected profits, how is the rate of inflation and fluctuation affecting the company’s general performance, has it issued dividends recently or it prefers "ploughing back" or retaining the profits to the company among others. This will actually give you a clear picture on what to imminently expect.

 However, in the period of recession, political instability, wars and turmoil, uncertainty becomes inevitable. Though, by investing on a company with a good reputation that is quality-defined, you are assured that good stock performance will follow suit. You will actually end up getting good returns from your investment because when the company achieves economic success, the stock price will rise and this would imply gains on your side.

You can take this example; you have invested $3000 to buy 200 shares at $15 per share. When share price reaches $20 you will have gain $1000 giving you a return of about 33.3%. Lastly, as you invest, take heed on growing and protecting your cumulative investment portfolio through diversification. Thus by checking on such implications, you will find your investment thriving swiftly and consistently since in any business, smart speculations matter most!