January - March 2017 •
The Lion King
• 7
Business
Protecting Your Investments
to
Get Higher Returns
By Udeme Ekwere
T
hese are very hard times indeed, and as such, every
extra penny is important. Of course investing extra
income is usually a sure way to increase the value of
your savings, rather than to leave it sitting idly.
Investing your money can allow you to grow it.
Most investment vehicles offer returns on your money over
the long term. These returns allow your money to build,
thus, creating wealth over time. If carried out wisely, these
investments when they are done with a long-term focus can
bring about interesting yields to the investors, which could
aid in their future plans.
There are various investment options which an individual
can choose from, including but not limited to mutual funds,
bonds, treasury bills, fixed income assets, stocks and shares,
certificates of deposits, land and properties.
Because money is hard to come by, monitoring your
investment, whether in mutual funds, stocks and shares or
any other means cannot be overemphasized, as failure to
keep an eye on your investment can lead to huge losses on
the part of the investor.
By keeping an eye on your investment portfolio, you can
prevent minor mistakes from turning into big problems. You
can protect your investments by taking the following steps:
Diversify your risks:
This is a very
important rule of the game. In other
words, ‘do not put all your eggs in
one basket.’ If you fail to diversify,
you increase your risk. For instance, if
you put all your savings in a certain
company, and something happens
to the company which leads to its
folding up, chances are you may
not get your hard-earned money
back. Therefore, a wise investor should
spread his risks; you can opt for various
sectors in an economy, or different
investment options to diversify your
portfolio and increase your chances
of higher returns. The truth is at one
point or another your investments will
drop in value. If you don’t want to
deal with volatility, you’ll be better
off sticking to cash and government
bonds. However, you can’t expect
higher returns from these. Stocks and
bonds offer higher returns but they
present higher risks, too. Despite that,
if you still wish to invest in stocks and
bonds, you can minimize the risk of
volatility and protect your investments
in the process by placing them in a
diverse mix of bonds and stocks.
Review
your
portfolio
regularly:
From time to time, an
investor should put his books in order,
and review his portfolio to ensure
that his investments meet up with his
planned objectives. Be sure that you
understand and are comfortable with
the risks, costs, and liquidity associated
with your investment options. You
have a right to know what is on your
portfolio and ensure that all records
about you are accurate and are in
line with your investment objectives
and goals and make any changes
where necessary.
Learn to reward yourself:
You
need to learn to reward yourself when
you have made some meaningful
profit off your investment. You can pay
yourself by selling off a small part of
your profitable venture and investing
the income in something else. This will
also help to reduce risks if any, and to
ensure that your funds are not stuck in
one sector all the time.
Keep all documentation safe:
It is important to take time to study
and read all documents that you
receive from your broker, mutual fund
or investment adviser, and also ensure
that documentation are kept safe.
If you do not understand anything,
consult your financial adviser or
lawyer. Also check to make sure
your confirmations and account
statements are accurate.
Put your money where your
mouth is:
Literally! You should
only invest in what you believe in
and not based on just hearsay. In
other words, if you don’t understand
an investment, then don’t put any
money into it. There are lots of good
investment opportunities that are easy
to understand. Why risk putting money
into something that might or might
not make sense? Alternatively, spend
more time learning about the markets
and sectors you wish to invest in.
Lastly remember that if something
sounds too good to be true, it probably
is. There is no such thing as a free lunch,
but there are plenty of con artists who
are willing to take your money.
