Connect with us
UNCTAD

BUSINESS

8 Investment Terms To Know In 2022

 

Investments are one way to scale up your finances, and you begin the process by understanding the terms used in investment. Here are 8 terms you need to start off from.


Read more about Business


Stockbroker

A stockbroker is a professional who buys and sells stocks, shares and other financial securities on behalf of people, companies and organizations. The stockbroker market is regulated by law and the exchange occurs in a stock exchange market.

A stockbroker can also be an investment advisor who guides buyers and sellers on how to invest profitably in the stock exchange market, and keeps them informed on the complexities of the financial stock market. Apart from these, a stockbroker also acts as a security dealer.

Capital Market

The Nigerian Capital Market is a market for long term investments where securities and corporate equities are issued and traded. Just like banks are noted for short term investments, the capital market is for long term investments. It is regulated by the Securities and Exchange Commission (SEC) in Nigeria.

Capital Appreciation

Capital appreciation is a rise in the market price of an investment. It is the difference between the purchase price and the selling price of an investment designed for capital appreciation such as real estate, mutual funds, exchange-traded funds, stocks and commodities.

Dividends

A dividend is the distribution of some part of a company’s earnings to eligible shareholders, determined by the board of directors. These payments are made by publicly listed companies as a reward to investors for their money being used in the venture.

However, some companies can retain their earnings and invest them back into the company instead of paying dividends.

Investment Risk

Investment risk is the measurement of the likelihood of losses or yields from a particular investment. It is simply measuring the level of uncertainty of achieving the results in accordance with the expectations of an investor.


Sign up to the Connect Nigeria daily newsletter


Risk assessment is very important in determining the prospects of an investment. The lesser the investment risk, the more profitable the investment will be. However, in actual reality, the higher the risk, the better the returns.

Maturity Date

The maturity date is the date that the principal amount of debt instrument becomes due, that is, the principal investment is repaid to the investor. It is the date on which the borrower must pay back an instalment loan in full. The categories of maturity dates range from 1-3 years, 10 – 20 years, 30 years typically for treasury bonds.

Once the maturity date is reached, the interest payments regularly paid to the investors will cease since there is no more debt agreement.

Mutual Fund

A mutual fund is a financial vehicle consisting of a portfolio of stocks, bonds and other securities. Mutual funds give small or individual investors access to professionally managed portfolios of equities, bonds and other securities.

Mutual funds pool money from the investing public and use it to buy securities. The value of the mutual fund company depends on the performance of the stocks and bonds they decide to buy.

Treasury Bills

Treasury bills are instruments issued by the Federal Government through the Central Bank of Nigeria. It is seen as lending money to the government when an investor buys a Treasury Bill. Treasury bills are one of the safest investments as it is backed up by Government credit. The Government uses the money to fund its debt and pay ongoing expenses incurred. It has different maturity dates and rates.

Treasury bills afford you the opportunity to lend money to the government and pay at a time, usually after a period of 91 days, 182 days or 364 days, subject to choice.

As you grow in the knowledge of investments, you will learn how to appropriately diversify your resources in 2022, based on your risk level, temperament and experience.

Featured Image Source: UNCTAD


Got a suggestion? Contact us: editor@connectnigeria.com

Continue Reading
Advertisement

Grace Christos Is a content creator with a proven track record of success in content marketing, online reputation management, sales strategy, and so much more.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

To Top