The investment decisions that you make today will have positive or negativeimplication on your life in the future. Therefore, you should have a soundfinancial plan in order to achieve a safe, secure, and comfortable future.
In order to achieve your financial and investment goals, you should seek from the advice ofexperts who are specialized in financial and investment planning.
Through its’ Treasury and Investment Department, the Housing Bank for Trade and Finance can help you analyze and determine your financial goals and suggest appropriate investment solutions.
Before presenting the various services provided by HBTF Treasury and Investment Department,it is important to identify the main investment terminologies and principles: .
-What are theFinancial Markets?
-What is a stock?
-What is a bond?
-What is the difference between a stock and a bond?
-How to invest in the Financial Markets?
-What are the measures that you should consider whilst investing in the Financial Markets?
-What are the elements that affect theappreciation and depreciation of stocks?
What are the Financial Markets?
The Financial Marketsare places where dealers and market makers of a particular asset gather to buy and sell securities.Theyfacilitatethe trading of securities and other financial instruments.
What is a stock?
A type of security that signifies ownership in a corporation and represents a claim on part of the corporation’s assets and earnings.
Two types of stocks:
1.Common Stock: entitles the owner to vote at shareholders’ meetings and to receive dividends. It is the most frequent and commonly held form of ownership.
2.Preferred Stock: does not have voting rights, but has a higher claim on assets and earnings than common stocks.
Owners of a preferred stock receive dividends before common stockholders and have priority in the event that a company goes bankrupt or is liquidated.
What is a bond?
A bond is a debt security, in which the issuer owes the holders a debt and is obliged to repay the principal and interest. Bonds are generally issued at a fixed or floating rate for a fixed term longer than one year and extends to more than ten years. For corporate bonds are less costly than getting a loan from banks.
What is the difference between a stock and a bond?
Bonds and stocks are both securities, but the difference is that stockholders own a part of the issuing company , whereas bond holders are in essence lenders to the issuing company. Also bonds have a definite lifespan, whereas stocks may be held indefinitely.
How to invest in the Financial Markets?
Investing in the stock market through bonds or stocks can be either a long-term or a short-term investment. Investors who wish to deal in the equity market must have the desire for long-term investment.
To invest in the stock market, you simply may buy stocks of several companies, whenthe share’s value of that company appreciates your shares in that particular corporation will worth more. If the company runs into trouble and loses, its stock value maydrop and so will your shares. Of course this is not always the case because there are many variables that affect the company’s share price.
What variables should you consider whilst investing in the Financial Markets?
General direction of the Financial Markets in the long run: It is not advisable to speculateon daily fluctuations of your shares. Always seek the general direction of the stock market in the long run.
Study the market: Make an effort ingathering all relevant information about the corporation you wish to invest your money in. Do not follow yourpeople’s advice, but rather ask yourbroker to supply you with all the relevant data about the financial markets, andthe names of corporateswith the highest expected returns.
Do not follow your emotions and fears: Do not let your emotions and fears guide your investment decisions. Do not invest all your fundsin one corporation because you are employed by them , the rumors surrounding it or any other reason. There is a saying “Don’t put all your eggs in one basket”. Always diversify your investments in reputable companies, who are knownto achievegood results. When you diversify you lower your investment risk. This is because one poor performing investment is offsetby another that may perform well during the same time period.
Study and monitor: Investment requires you to study, research and keep up with all market updates. Observe all the changes taking place in the market and their effect on your investments. Give yourself the time and chance to review your investmentsregularly, but not necessarily on daily basis.
What are the elements that affect the rise and fall of stocks?
Company Performance: Variables that affect a company’s performance include type of management, financial status, probability of growth, etc. The company’s current and expected profitability is one of the elements that affect its stocks price.
Sector Performance: Your can monitor the sector performance through sector’s index available in the daily market journal.
Economic Conditions: Prices of stocks rise when the economy is growing and falls when it is shrinking, thus some economic indicators affect stock prices.
Political events: Prices of stocks are affected by political eventssince they are interconnected with economic growth.