Is Investing in Shares Still Profitable?

Jump to buying shares can be very risky. Investing in stock is easy, but investing successfully is difficult. Knowing that there are risks involved and also there are alternative investment opportunities, is buying stocks still profitable?

Yes. If you follow the guidelines below:


The first question fresh investors should ask is why am I choosing to put my money in stocks? The stock market comes with healthy risks and attractive rewards, both for short and long term players.

Investors are said to prefer the stock market because the offer the greatest returns in the short term. But stocks are also very volatile as they are driven by speculations regarding market activities, the value sometimes can fall below the price you purchased. Hence chasing stocks of companies with good reputation is often your best bet.


Before you make any decision about buying or selling shares or funds, find out as much as you can about the company or fund. Do your own research or get financial advice.


There are two ways of getting money from shares of a company:

• If the company grows and becomes more valuable, the share is worth more – so your investment is worth more too.
• Some shares pay you part of the company’s profits each year, called a dividend.

If you buy shares in larger, long-established companies you’ll probably get dividends, but you might not get rapid growth.

Shares that pay regular dividends are good for getting an income or the dividends can be reinvested to grow your capital.

Dividend income is taxed at a different rate from savings interest.

Smaller companies often don’t pay dividends. They might have more chance to grow rapidly, but can be more risky.

Given that the market is littered with risks and rewards, it is important to keep the word “balance” in mind when building your portfolio. Ensure you have a mix of highflyers (stocks with high growth rate), slow-and-steady (shares with high prices but steady yields) and a few gamblers (those that can either plummet or soar quickly). This allows you manage enjoy the gains of investing in stocks as well as absorb unusual shocks.


Most people invest to make money, and it’s no different for those who put their money in the stock market. The capital offers two key ways of making money: the first is by receiving dividends from a company whose shares you acquired. Dividends are small payments made to shareholders when by the investee company. It is done mostly when the company declares a profit for an operating year. Another way is to cash-in on your shares by selling them. You can turn in a profit when you sell at a higher price than you initially purchased them.

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Factors To Consider While Selecting A Location For Your Business Store/Office

Making location determinations can be as simple or as complex as you make it. There are, for instance, sophisticated location analysis tools available that include traffic pattern information, demographic and lifestyle data, and competitive analyses.

You know your target market and the product or service you’re going to sell. But you’re still undecided about where you want to set up shop/office, and the decision shouldn’t be taken lightly. From street visibility and foot traffic to the cost of commercial real estate, choosing the right space makes a big impact on your bottom line.

Style of operation: Make sure your location is consistent with your particular style and image.

Demographics: Start by considering who your customers are. How important is their proximity to your location? If you're a retail store that relies on the local community, this is vital. For other business models, it might not be.

Foot traffic: If you need people to come into your store, make sure that store is easy to find. Remember,even the best retail areas have dead spots.

Accessibility and parking: Is your building accessible? Don't give customers a reason to go somewhere else because they don't know where to park.

Competition: Sometimes having competitors nearby is a good thing. Other times, it's not. You've done the market research, so you know which is best for your business.

Proximity to other businesses and services: This is more than just about foot traffic. Look at how nearby businesses can enrich the quality of your business as a workplace, too.

Image and history of the site: What does this address state about your business? Have other businesses failed there? Does the location reflect the image you want to project?

Ordinances: Depending on your business, these could help or hinder you. For example, if you're starting a daycare center, ordinances that state no one can build a liquor  store, brothel or beer parlor nearby might add a level of safety for you.

The building’s infrastructure: Especially if you're looking at an older building or if you're starting an online business, make sure the space can support your high-tech needs. If you're getting serious about a building, you might want to hire an engineer to check out the state of the place to get an objective evaluation.

Rent, utilities and other costs: Rent is the biggest facilities expense, but check out the utilities, as well, and whether they're included in the lease or not. You don't want to start out with one price and find out it's going to be more later.

Practical Ways Of Financing Your New Business Ideas/Startup

Lack of capital is one of the biggest threats to entrepreneurs across the world, especially in tough business environments like Africa.

In fact, most people say it’s hard – almost impossible – for entrepreneurs to raise capital on the continent, especially if you’re a startup. But, in most cases, “lack of capital” is not the problem. The real problem is  “lack of awareness.”

Below are some practical ways of financing your new business idea.



Bootstrapping

When first getting started, many entrepreneurs use “bootstrapping,” which means financing your company by scraping together any personal funds you can find. This typically includes your savings account and any home equity lines you may have.

In many cases, using the money you have instead of borrowing or raising is a great approach—in fact, some entrepreneurs continue to bootstrap until their business is profitable. This can be beneficial because it means you won’t have extensive loans and monthly payments that bog you down, especially if you run into snags along the way.



Pitch Your Business Idea To Angel Investors

If you have a tech start-up, you’ll probably eventually need more capital to really get going—to hire people or get office space, for example—than bootstrapping and crowd-funding will afford you. You’ll likely need to reach out to outside investors. A good place to start is angel investors, usually established business professionals with high net worths who are looking to invest in promising companies.

Typically, an angel will invest anywhere from N500,000 to a few million Naira. To be able to get an angel investor to invest in your business, you need to have a good business plan and be enthusiastic when pitching your business idea and drive to the investors.


Related post: Email address list of high networth individuals in Nigeria for marketing purposes



Small Business Grants

Grants are non-repayable funds or products disbursed or gifted by one party (grant makers), often a government department, corporation, foundation or trust, to a recipient, often (but not always) a nonprofit entity, educational institution, business or an individual.

Examples of some organizations providing funding for startups include: Investment AB Kinnevik, African Women’s Development Fund(AWDF),  Tony Elumelu Entrepreneurship Programme (TEEP), the Africa’s Young Entrepreneurs Empowerment Nigeria (AYEEN), the Dangote Foundation, Bank of Industry (BOI) and a host of many others. For many of these organizations you have to show a strong desire to succeed, a passion for entrepreneurship and a willingness to help others.



Raise Money From Your Family And Friends

Hitting up family and friends is the most common way to finance a start-up. But when you turn loved ones into creditors, you're risking their financial future and jeopardizing important personal relationships. A classic mistake is approaching friends and family before a formal business plan is even in place.

To avoid it, you should supply formal financial projections, as well as an evidence-based assessment of when your loved ones will see their money again. This should reduce the likelihood of unpleasant surprises. It also lets your investors know you take their money seriously.

 You also need to seriously consider how the arrangement will be structured. Are you offering equity? Or will this be a loan? Perhaps most importantly, you need to emphasize the risk involved. Offer up a strong business plan, but remind them there is a good chance their money will be lost.