THOUGHT OF THE WEEK
UNDERSTANDING ASSET CLASSES AND INVESTMENT RISK (PART 3)
? Stocks: A stock represent part ownership of a company. Stocks allows investors to share in the company’s success through increase in share prices and dividends. Shareholders have residual claim on the company’s assets in the event of liquidation. The prices of shares moves up and down based on performance and other information about the company. In Ghana, shares of public company are traded on the Ghana Stock Exchange. One can buy stocks on the Ghana Stock Exchange through a licensed stockbroker. Shares are considered risker than corporate bonds.
? Alternative Investments: The universe of alternative investment include real estate, private equity funds and commodities. Investments in alternative are illiquid and are long-term investments in nature. Alternative investment is considered riskier than stocks.
Before putting your money in any investment, it is important to have knowledge of the asset class you are investing in and understand the risk associated with them. One way of minimizing risk is to diversify. You can start with investment in the asset class you understand and add to it over time.
However, if you are too busy to monitor a portfolio, you can invest in a collective investment scheme which is managed by investment professionals. It is important to read the scheme particulars if you decide to invest in a collective investment scheme. Investment education is important, always avoid investments you do not understand.
This weekly report is the copyright of NIMED Capital Ltd. (NIMED), an investment banking company licensed and regulated by the Securities and Exchange Commission (S.E.C.) of Ghana as Investment Advisers as well as the National Pensions Regulatory Authority (N.P.R.A.) as an approved Pension Fund Manager. Information and opinions herein have been compiled or arrived at based on information obtained from sources considered reliable; we therefore do not hold ourselves responsible for its completeness or accuracy. All statements of opinion, projections, forecasts, or those relating to expectations regarding future events or performance of investments represent NIMED’s own assessment and interpretation of information currently available to NIMED, which are subject to change.