God has not frowned on investments since He is a “sophisticated investor,” He gave out Jesus His only son that He might gain the whole world. Investment is well defined as a thing that worth buying, because it will be useful or helpful. On the other hand, is the act of giving time or effort to particular task in order to make it successful. You can invest money, time and other human and material resources for gains. There are many investment windows available, but this article will only focus investment in share or stock.
What is share? Share is a unit of company capital of equal value into which a company is divided and sold to raise money. It entitles you to the overall or partial ownership of company in which you invest. It means you are an insider with authority to determine the direction of company.
How to Become a Shareholder
You can become shareholder in one of the quoted companies through:
Primary Market
This is a market where fresh funds are sold and the issuers (companies or Govt. agencies that want to raise funds) get fund direct from the investors. The share is sold at a specific price over a period of time. For example Union Bank of Nigeria recently sold share at N20.00 per share. When a company is raising funds first time in its lifetime, it is called Initial Public Offer (IPO). Already quoted companies can raise funds in form of Offer for subscription (to the investing public) or Right Issue (to the existing shareholders). Primary market is the cheapest and easiest way to own share.
Secondary Market
This is a market where investors in Primary Market can transfer or trade with their shares. The holders use this avenue to sell their shares to any interested buyers who want to buy. These investment decisions are executed through Stockbrokers. This transaction takes place on the floor of Stock Exchange every working day.
The Benefits of Shareholding
Share gives you some benefits which other investment packages may not give you.
You share part of the company's profit. It can be dividend or bonus shares.
A good stock will always appreciate in value over time. For example, the share of Zenith Bank Plc bought at the rate of N10.90 increased to over N20.00 in a certain period. Also, it has generally out performed other forms of investment as a hedge against inflation.
It saves time. You don't need to waste your valuable time before earning income.
It is easy to buy and sell any time if it is a good stock.
It is a means of savings.
It gives voting right to the holders irrespective of the units held. You can be a member of the Board of Directors if you own substantial shares.
You can use your share certificate (in case of primary market) or CSCS statement (in case of secondary market) as collateral in Banks and other Financial Institutions for obtaining loan.
You do not need large money before you start buying shares. Law protects your investment.
In conclusion, investing in shares should start while it is day, for “the night is coming when no one can work”. If you need more information on investment in share, contact stockbrokers, accountants, solicitors or other professional bodies.
