Why Students Should Invest In Capital Market

Capital markets are financial markets for the buying and selling of long-term debt or equity-backed securities. These markets channel the wealth of savers to those who can put it to long-term productive use, such as companies or governments making long-term investments. Capital markets are defined as markets in which money is provided for periods usually longer than a year.
Capital markets are risky markets and are not usually used to invest short-term funds.

The purpose of a financial market is to set prices for global trade, raise capital and transfer liquidity and risk. So the investor's risk is very minimal.

Related Post: Investing on Nigeria Stock Exchange Market


Why Students Should Invest Now In Capital Market

Savings

Investing in securities that are listed in the Capital or Stock market encourages student investors to accumulate their savings/pupils in small amounts over time. Re-investing your earnings is a sure way of securing a brighter financial future before you finish schooling.

Income

Investment in the stock market provides a source of income to students. Shares pay dividends when companies declared profits and decide to distribute part of the profits to shareholders. Bonds pay an interest income to the bondholders.  Most times, the income earned from listed securities is higher than interest earned from the money or banking sector.

Wealth or Capital gain

Whenever the prices of securities listed in the market go up, the value of the investment of the holders of those securities increases.  This is called capital gain and is an important way of growing wealth through the stock market.  It is important to note that a one –off investment in the Capital market does not make sense.  It is therefore the accumulative investment( and re-investment of earnings) over time that creates opportunities for growth in wealth through the Capital Market.

Securities as Collateral

Listed securities are easily acceptable as collateral against loans from financial institutions. This is important especially when a student graduates and wants to venture into any business that requires capital.

Liquidity

Liquidity is the ability to convert shares or bonds into cash by selling within the shortest time possible without losing much value.  When a student needs funds urgently, listed securities could be very useful because they are more liquid than most other forms of assets.

Bonds pay an interest income and shares pay dividends income

Grow wealth: Over time, the value of your investment increases, whenever the prices of your stock go up. This is called capital gains.
Listed securities are easily acceptable as collateral against loans.

Note for parents: one way parents could encourage the young ones is by buying shares for them as reward for academic excellence.

How Much Do You Need To Start?

This is one question must students will have in their minds. Don't be discouraged. With as little as N5,000 you can start up your financial journey. You can invest in FBN Capital Asset Management. The FBN Money Market Fund offers individuals the opportunity of starting small.

There are money more investment opportunities in the capital market that are favourable to student. Start today and be financially stable in future.

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