Connect with us
Paramount
Advertisement
Ican
Advertisement
IZIKJON
Advertisement
forex
Advertisement
Stanbic IBTC
Advertisement
Binance
Advertisement
Esetech
Advertisement
Patricia
Advertisement
Fidelity ads
Advertisement
app

Financial Literacy

How To Cut Your Losses in a Bearish Market

Consult an investment advisor or broker before taking investment decisions.

Published

on

Nigerian stocks

The equities market has been on a downtrend in the last few months and September has shown signs of following the same pattern. This has largely been due to investors fleeing emerging markets and exiting the country ahead of the elections in 2019.

Year to date, the All Share Index is down 10.81% and is the worst performing exchange in Africa.

READ: Consider incorporating Bill Gates’ most reliable investment strategy today 

It is, however, important that investors learn to cut their losses in a bearish market and move on. Holding on to a stock in a bearish market, with the hope of a rebound would inevitably lead to stock positions with large unrealized capital losses.

So, the question is how do you cut your losses when investing? To effectively cut your losses when investing, you need to properly monitor your investment. Don’t just buy financial instruments and keep them like some fancy jewelry. Even if you are investing for the long-term, be conversant with what is happening to your investment.

READ: Elon Musk closes in on Jeff Bezos for world’s richest man title

Watch/read financial and economic news, be in the know as to what is happening in the market and how it affects your investment. If you cannot keep up with the news and happenings around, hire an investment advisor who will watch over your portfolio and guide you on what to do as the tide changes.

Flexibility is important in investing, be flexible with your investment decisions; look out for other viable investment options. At the moment the debt market offers better returns than the equities market (rates on 90day bills are going for 11%). You can withdraw funds from the equities market and invest in the debt market till the economy/equities market starts showing signs of a rebound.

READ: PayPal Crypto service on high demand

For new investors, make sure you have an investment plan/strategy in place before putting your money on any financial instrument. An investment strategy will clearly state, what to invest in, when to buy and sell, it would state prices at which to take profit or stop losses.

Before putting together an investment strategy, assess the factors that influence the movement of the market which are basically the socio-economic environment, economic actions of superpowers, corporate actions, stock fundamentals, and market sentiments.

READ: Buhari move to borrow $2.79billion in international market

Put this side by side with your investment goals to form a realistic investment strategy. Make sure you have credible reasons for buying or selling a stock. Do not buy a stock because you like the company or other personal sentiments.

bitcoin train

The sole aim of any investment decision is to grow your funds and give impressive yields. Investing for the sake of investing makes no economic sense. Monitor your investments and try to get as much as you can from them. Every naira counts.

Binance

We advise that investors consult an investment advisor or broker before taking investment decisions.

READ: Fidelity Bank to raise N50 billion in bonds in Q4 to refinance existing debts

Jaiz bank ads

*This article was first published on Nairametrics on October 25, 2016, and has been updated to reflect current information.

Nairametrics is Nigeria's top business news and financial analysis website. We focus on providing resources that help small businesses and retail investors make better investing decisions. Nairametrics is updated daily by a team of professionals. Post updated as "Nairametrics" are published by our Editorial Board.

2 Comments

2 Comments

  1. Wale

    September 7, 2018 at 9:17 pm

    Good evening sir,
    Can you recommend a professional stock broker that can execute transactions between 2-3 days? The broker I use is not reliable.

  2. Wale

    September 7, 2018 at 9:22 pm

    Can you discuss the topic: why do stock brokers delay transactions, giving reasons.
    They don’t encourage real time trading.

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Personal Finance

5C’s of creditworthiness: What lenders, Investors look for in a business plan

Business owners need to be aware of the criteria lenders and investors use when evaluating the creditworthiness of entrepreneurs seeking financing.

Published

on

Five things to consider before securing a loan

Banks usually are not a new venture’s sole source of capital because a bank’s return is limited by the interest rate it negotiates, but its risk could be the entire amount of the loan if the new business fails. Once a business is operational and has an established financial track record, banks become a regular source of financing.

For this reason, the small business owner needs to be aware of the criteria lenders and investors use when evaluating the creditworthiness of entrepreneurs seeking financing.

Will the business that an entrepreneur actually creates look exactly like the company described in the business plan? Of course, not.

The real value in preparing a business plan is not so much in the finished document itself but in the process it goes through – a process in which the entrepreneur learns how to compete successfully in the marketplace. In addition, a solid plan is essential to raising the capital needed to start a business; lenders and investors demand it.

Lenders and investors refer to these criteria as the five C’s of credit.

READ: 5 ways to raise funding for your business

1. Capital: A small business must have a stable income base before any lender is willing to grant a loan. Otherwise, the lender would not be making, in effect, a capital investment in the business. Most banks refuse to make loans that are capital investment because the potential for return on the investment is limited strictly on the interest on the loan, and the potential loss would probably exceed the reward. In addition, the most common reasons that banks give for rejecting small business loan applications are undercapitalization or too much debt. Banks expect a small company to have an equity base investment by the owner(s) that will help support the venture during times of financial strain, which are common during the start-up and growth phases of a business. Lenders and investors see capital as a risk-sharing strategy with entrepreneurs.

2. Capacity: A synonym for capital is cash flow. Lenders and investors must be convinced of the firm’s ability to meet its regular financial obligation and to repay loans, and that takes cash. More small businesses fail from lack of cash than from lack of profit. It is possible for a company to be showing a profit and still have no cash – that is, to be bankrupt. Lenders expect small businesses to pass the test of liquidity, especially for short term loans. Potential lenders and investors examine closely a small company’s cash flow position to decide whether it has the capacity necessary to survive until it can sustain itself.

READ: How to scale as a small business on a budget

3. Collateral: Collateral includes any asset an entrepreneur pledges to a lender as security for repayment of a loan. If the company defaults on a loan, the lender has the right to sell the collateral and use the proceeds to satisfy the loan. Typically, banks make much unsecured loans (those not backed up by collateral) to business start-ups. Bankers view the entrepreneurs’ willingness to pledge collateral (personal or business assets) as an indication of their dedication to making the venture a success. A sound business plan can improve a banker’s attitude towards venture.

4. Character: Before extending a loan or making an investment in a small business, lenders and investors must be satisfied with an entrepreneur’s character. The evaluation of character frequently is based on intangible factors such as honesty, integrity, competence, polish, determination, intelligence, and ability. Although the qualities judged are abstract, this evaluation plays a critical role in the decision to put money into a business or not.

READ: 7 Ways to pay for your higher education

5. Conditions: The conditions surrounding a funding request also affects an entrepreneur’s chances of receiving financing. Lenders and investors consider factors relating to a business’ operation such as potential growth in the market, competition, location, strength, weakness, opportunities and threats. Another important condition influencing the banks is the shape of the overall economy, including interest rate levels, inflation rate, and demand for money. Although these factors are beyond an entrepreneur’s control, they still are an important component in a banker’s decision.

bitcoin train

The higher a smaller business scores on the five C’s, the greater its chances of receiving a loan.

Binance

 

Written by Chukwuma Aguwa

Jaiz bank ads

Continue Reading

Personal Finance

Don’t be fooled by COVID-related scams

Always consult the institution in charge of health-related matters to confirm any fishy information you come across.

Published

on

The nature of and the manifestation of the Covid-19 disease is such that there’s only a little time available to remedy the situation before it gets chronic. Although the infection begins by exhibiting mild symptoms, if you do nothing in a short time, it could lead to death in a matter of days.

This whole picture has caused many to become desperate about Covid-related issues, launching into panic mode at the sight of any information. As a result, such people are not far away from falling for fraudsters.

With the different kinds of news flying around, you mustn’t be fooled by Covid-related scams.

The Coronavirus threatens the health of millions of people around the world daily, also killing thousands along the way. To curb the spread and remedy the situation, bodies like the CDC, WHO, and every country’s local health organisation like the NCDC, frequently circulate information around communities. However, it has also led to fraudsters taking advantage to provide fake news, and even asking for donations.

Each day, there seems to be a new account or NGO asking for donations into the health sector, and though some are legit, many are just fraudsters posing to take advantage of innocent citizens. So far, numerous complaints about scams have been recorded, especially with people who are looking to support the health cause in any way they can.

READ: Africa to spend $9 billion on Covid-19 vaccine, access to supply is big problem

Channels used for COVID-related scams 

There are three major ways scammers take advantage of the haziness of the situation to dupe people. To start with, they appeal to the emotions of humans, who see the high death toll and suffering. As a result of what is happening, people have been willing to donate funds for medical supplies, isolation centres, and financial compensation for medical workers.

Scammers take advantage of this by posing as charity organisations and solicit for funds. Most times, as soon as their target is met, they clear their footprint without leaving a trace behind.

Another way they scam people is by manufacturing and selling fake or low-quality health products. Everyone wants to get their hands on a cure, or something that can at least protect them from the virus, and scammers are meeting their needs by providing just that.

READ: China joins WHO vaccine programme as it fills huge gap left by United States

The World Health Organization currently approves only one vaccine, and any other thing outside it is outrightly fake or just a supplement that will help your body. Currently, only the Pfizer vaccine is clinically tested and approved to work. Be sure to not throw your money in the wind by purchasing some of these fake drugs around.

Lastly, scammers create systems to extract a patient’s personal information, thereby having access to the person’s true identity. It could be in the simple form of opening a registration portal where you supply all your details.

Therefore, only give information to approved bodies and not any random online site that appears legit. These fraudulent individuals can do a lot of damage to your identity. Stay vigilant, only communicate with approved bodies, and always ask questions if you are not sure or suspect foul play.

bitcoin train

The place of electronics in COVID-related scams

These fraudsters usually reach out to you through the digital sphere. Hence, watch out for cold calls, text messages, or emails requesting donations to certain bodies. The best way to confirm the legitimacy of such a message is to visit the organisation’s official website in a different browser. Never follow the link in the mail or text directly, as it can be easily embedded with spyware. Therefore, a single click could see them extract all your personal information, including bank details.

Binance

Also, please stay away from those who claim to have a cure, and accompany it with testimonies of people who have used it. They are low graders desperate for your money. Vet them by searching online and see what people are saying. In all, always look out for suspicious messages, and opt out if you are sceptical.

In a nutshell, you should not believe any cure, vaccine or supplement that the World Health Organization does not approve of.

Jaiz bank ads

Conclusion

The government or legit health institutions do not cold call citizens to request donations or coerce them into making one. If you receive a call out of the blues, chances are it’s a scam, which is why they mostly try to hurry you to donate before you realise it. Always consult the institution in charge of health-related matters to confirm any fishy information you come across.

Continue Reading
Advertisement




Advertisement

Nairametrics | Company Earnings