How to become a smart investor
We’ve all heard that if an investment offer is too good to be true, it’s probably not true. But the tricky part for most investors is knowing what “too good” means.
With a plethora of investment offers available today, it is easy to fall in the wrong hands. Being a smart investor helps you avoid the needless torture of losing money to scammers, and plan your time and money well.
So who is a smart investor?
A smart investor is not someone who understands their investment goals and risk appetite and invests accordingly. While others are trying to make loads of money overnight, smart investors deploy available resources to make a consistent investment, have a diversified portfolio and build wealth over a period of time.
Smart investing helps you do two important things:
- Allows you to create an additional source of income
- Provides long-term financial security
At the last Virtual Townhall Meeting, our investment advisers discussed ways investment red flags to look out for, a checklist for verifying offers, and credible investment opportunities to explore.
In our usual fashion, participants had the chance to seek clarity on grey areas. Here are some questions and answers from the webinar.
Q1. But there are some companies that are even registered with the SEC, yet some years down the line, one’s fund is trapped, saying that the SEC instructed them to stop. In that instance, would you say that the person has not done due diligence?
No. Unfortunately, companies go bankrupt and cannot meet up with their debt obligations.
Q2. What’s your take on cryptocurrency?
It is a high-risk investment and is also not approved by the Securities and Exchange Commission(SEC).
Q3. Private placements in the public arena trapped many investors. Can you say the investors were mistaken?
No. At the time, they were considered viable investment opportunities. Unfortunately, most of them have not been able to sustain the investments.
Q4. Are you saying if I go to the SEC website now, I will see all the products offered by Afrinvest listed there?
Q5. I wish to invest or buy shares in MTN and some other well-known companies in the world, like Nestle and Dangote. I have searched and searched for this info, but I couldn’t get any. Can you share any legitimate companies we can invest in?
You can invest in them through Afrinvest Securities by opening a stock brokerage account with us.
Q6. How safe are commercial papers?
They have some level of risk associated with them.
Q7. I understand that commercial papers have higher risks depending on the company. In a case where issues come with the company, will the capital invested be affected or just the interest being expected?
Both the capital and the interest will be affected.
Q8. Say one invests 100k in Treasury bill, what is the return for example for 90days?
The interest is highly dependent on the going secondary market rate for the day. Now it is currently at 5.7% per annum.
Q9. On commercial papers, do you appraise the products before offering them to your clients, or do you leave the risk to your clients? What do you do on CPs before offering them to your clients to subscribe to?
We do extra due diligence on all CPs before advertising them to our clients.
Q10. How effective is your stock recommendation?
The recommendations are made by professionals who are trained in the different sectors to give an updated insight into the market.
Q11. Please, how does one get feedback on shares and dividends?
We send out daily market updates which will inform you when dividends are announced during the dividend periods.
Q12. I and my parents have invested in shares we can no longer keep track of. Can Afrinvest help with this?
Yes. We have a product for this service which helps recover all lost shares called Afritrack.
Q13. I invested in Treasury bills over twenty-five years ago and never collected any interest because I was instructed by the company, First Stockbroker Limited, to not roll over. Now the company has gone under. How can I get my money back?
You will need to get in touch with SEC and may a report this complaint and they will advise accordingly.
Q14. What should investors expect as the impact of a major shareholder of FBN (Otedola) selling off huge shares of his portfolio?
You will be required to follow the stock market closely to see the impact on FBNH shares.
Q15. What impact do liquidity and credit profile credit ratings of A- and A- from Agusto and DataPro respectively, have on a proposed commercial paper in terms of the risk?
A good rating is used to evaluate their default level.
Q16. I am an existing investor with Afrinvest. I am looking to invest to get an interest equivalent to an income, what came you advise?
Depending on the funds available for investment, you can invest in NTbills or Commercial Paper.
Q17. Since T-bills are now taxed, what about commercial papers? Is the interest also taxed?
Yes, it is taxed too.
Q18. I did a private placement in 2006 with Orient Petroleum, which is fully registered with the SEC, but till today I have not heard any news about the company. Is there anything I can do?
Yes, you can make a complaint to SEC and you will be advised accordingly.
That’s a wrap! The full webinar recording is available on YouTube.
Remember, our goal is to simplify investments for you. A visit to our website will show you how we can help you reach your financial goals.
Till the next Virtual Townhall Meeting, keep investing!