BEYOND SHARES-(ALTERNATIVE INVESTMENTS)

Beyond Shares: Alternative investment outlets for your money.
It was not like any of the ones you have held. At the last monthly meeting of Megawealth investment Club, held somewhere on Allen Avenue, Ikeja, Lagos members had been mobilized to be around for a presentation to the club by a top real estate agent practitioner. It was a full house and top on the agenda was discussion on where else to invest their money after one profitable year in the stock market.
Megawealth is among the few clubs that has done well in their investment activities in the stock market. Preliminary discussions of the report at the meeting showed that the club has raked in N11m from its investment in the Nigerian stock market which came to about 75 per cent in return. The club is planning to look elsewhere to enable it actualize its investment goal of 500% return on investment at year five when they are expected to decide whether they want to liquidate the club or continue.
It was therefore natural that when the presentation started, the opening from the chairman of the club, the estate practitioner was that the club should focus his advice on investment in the sector that could fetch the club minimum of 500 percent.
The stock market has done very well especially in the past seven months and there are indications that bullish charge would continue given the factors (pension fund money, influx of some foreign fund, depression in money market rates) fuelling the upward trend in the market. A big time investor celebrated a big time win in the stock market with some bottle of wine. He told some of his few friends that were around how he made N150million in First Bank alone among other decent returns in many of his investment.
In spite of the good performance of the stock market, portfolio managers advice that individual investors need to consider diversifying into other sectors and instruments in other to have a balanced portfolio that is believed to be an antidote to risks as opposed to putting ones investment eggs in one basket.
The risk in shares investment. The return on investment in Nigerian stock market is no doubt huge; but this is matched by the huge risks associated with playing in the sector. Just as an investor can pocket as high as 1,000 percent return on a good investment in the stock market, he can also lose everything invested. This is especially so as research suggests that only three percent of those who invest in shares do research. The rest just plunge in trusting friends and their stock brokers who in most cases are as ignorant as themselves.
Why invest in shares. What have endeared many investors to shares are the multiple avenues in which they can be rewarded. An investor can pocket some handsome money of the share he has invested if the price at which he is getting out is higher that the price at which he bought the share. He can also be rewarded by dividend payment if the company he has invested in its shares decided to give a portion of their income as reward to their shareholders. Sometimes, good companies give free (bonus) shares to their investors when they decide to reward them without shelling money. An added advantage is that you can use your share certificate as collateral to obtain loans from the banks or even your stockbroker. Not many investment instruments have such a possibility.
Why investors must look elsewhere. The primary goal of investors should be first and foremost not to lose the money he has invested even if he cannot get any return. Stock market is one place where you can lose everything and that is irrespective of whether you borrowed money to invest or you used your personal money.
Fund managers believe it is a measure of investment intelligence that one doesn’t put all one’s egg in one basket. They say there is a sense in diversification. This would include putting part of one’s fund in other instrument that don’t necessarily bring spectacular returns but can guarantee that the principal sums invested are not lost.
Look in the direction of money market. Investing in the stock market is about the safest as the likelihood of an investor losing his principal is rare, especially now that the Central Bank of Nigeria has cleansed the banking industry of its misfits. There is even more safety if you include treasury bills (Government instrument for borrowing money from the public) in your portfolio. The reason is that the federal government is unlikely to default. Indeed the returns on your investment are taken upfront. There are many instruments to consider in the money market. The most popular includes time deposits in various banks, commercial papers (which allows companies that need funding to borrow money directly from private individuals but guaranteed by a bank) the discount houses also have other innovative products that can yield decent returns (“money wise” is planning a focus on the five discount houses and what they offer)
Real Estate. This is one sector that is fast catching on. Those who have hit it big here swear that you hardly can lose with real estate investment.
There is a fact that is incontrovertible: that is if you plan very well you can make good money in any sector but supreme investment include planning not put all your investment eggs in one basket even if the return on that basket is supernormal.
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