Mr. Bismark, Rewane, MD, Financial Derivatives
Operators in the capital market have reiterated the need for investors to diversify their risk to include equities and other asset classes to cushion the effect of stock market downturn.
In a chat with newsmen in Lagos, Chief Executive Officer, Trust Yield Securities Limited, Alhaji Rasheed Yussuff, observed that the value of return on investment accruing to a particular investor was a function of his risk appetite, coupled with his willingness to diversify his portfolio.
He however, emphasised that in doing that, investors should stick to professional advice in making investment decision to avoid having their fingers burnt.
He noted that an investor’s specific peculiarity would determine the type of portfolio that would be structured for him by his brokers. “When we say portfolio, it is portfolio of investment. If you come to me and say you have N10 million you want to be invested, I should be able to sit you down and find out what your objectives are.
“With that, I can advise you to invest 20 per cent in Treasury bill, so that if you have an urgent need, you might not need to dispose your entire portfolio. I might say, ‘another 30 per cent should go to equities, another 10 per cent should go into property,’ and on and on like that so that I can distribute your money among various investment possibilities that are available to reflect your expectation, he stated.
“The same portfolio that will be suit you if you are a retiree, will not suit another person who just graduated from university or somebody that is about to get married. All these will determine the kind of portfolio that will be structured for you,” he added.
Managing Director, Financial Derivatives Company, Mr. Bismark, Rewane, observed that the key to successful investment lied in buying shares of companies with good track record and also spreading the risk across various sectors.
He said: “Key is buying good businesses and holding them; Locking-in and avoiding ‘wildcatting’ will lead to long-term gain. Investors should select winners in different sectors and create a diversified portfolio. Investing in companies with strong cash flow is also important.
“This is clearly a difficult investing environment but a good mix of both debt and equity investment is a winning formula. We believe the short end of the yield curve is the superior position."