Investing in Long Term Securities

While Return on investment (ROI) is usually the primary driver influencing investment decisions because let’s face it – who no like money? People invest for diverse reasons – to build wealth, to plan towards a future expenditure, for retirement and to hedge against unexpected life occurrences, amongst others. Investing may be for the short, medium, or long term.

This is why ROI considerations should propel investors to be cautious in their investment decisions to ensure that only the best securities, in terms of fundamentals, are selected for their portfolio. However, for those who have the patience to invest long term, the rewards are usually greater due to the power of compounding. Highly successful investors like Warren Buffet, George Soros and  Aliko Dangote, understand that long-term investment is the perfect proof of the ‘Time is money’ cliché. “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes” says Buffet.

Indeed, long-term investments in securities, be it equities, bonds, exchange-traded funds, and so on, have many benefits. It provides more time for compounding interest to work its magic. Simply put, the longer a stock remains invested, the longer the money has the potential to grow as a result of the exponential effects of compounding. Taking a long-term view of investment gives the investor more opportunities to reinvest his/her profits, which in turn increases its potential for further profit. Thus, reinvesting one’s returns, rather than cashing them in, means harnessing the power of compounding.

Long-term investments require a lot of patience because there is always that temptation to cash out when the stock rises. It’s also advisable that these investment decisions are guided by a professional stockbroker. 

Goal setting is another important part of long-term investments because it allows investors set realistic goals with definite timelines, as well as structure their investment portfolios in accordance with the time frame.

As a long-term investor, your emotions are not directly linked to the volatility of stock markets. Without the need to track indexes and market movements daily, you allow yourself the time and emotional space to focus on what is really important to you. If your long-term investment strategy is aligned with your risk appetite, this means that your portfolio should not be exposed to more risk than you are emotionally capable of handling.

Not many investors however have the temperament, time, knowledge and experience to pick the right securities and manage them for the long term. And even if an investor did have these competencies, the law requires investing in quoted securities through a broker with vast knowledge of the capital market and its operations. Holding the role of a financial advisor, these professionals have access to cutting-edge knowledge and investment strategies in the financial sector. A stockbroker provides insight into the complexity of the market and unveils certain advantages, disadvantages, risks, and rewards according to the financial utility of one’s investment vehicles. The stockbroker handles one’s investments and answers the pertinent questions that pertain to one’s investment vehicles, while acting as a middleman between one’s money and their investments, particularly concerning the brokers’ authority to buy and sell stocks.

Furthermore, a stockbroker handles the administrative paperwork and record-keeping that is required by law when making investments, as well as educates the investor on their initial investments and the resulting profits, losses, and records of past stock trades. He also establishes a learning-based relationship with the client; educates investors on the workings of the financial market and provides sound investment strategies for achieving success. Thus, it is important to have a seasoned professional stockbroker that understands investors’ expectations.

As Nigeria’s leading Stockbroker, Stanbic IBTC Stockbrokers, a subsidiary of Stanbic IBTC Holdings PLC, and a member of the Standard Bank Group, has over the years and through its offerings continued to provide solutions geared towards meeting the long-term investment needs of investors, thus earning the accolade as the nation’s leading stockbroker.

According to Broker Performance Report’s “Top 10 Stockbroking Firms”, a monthly publication of the Nigerian Exchange Group (NGX), Stanbic IBTC Stockbrokers was the leading broker with trades valued at N112.09 billion in H1 2021, having led the same category in the corresponding periods of 2019 and 2020. The firm accounted for 10.79 per cent of the total value of 39.34 billion units of shares valued at N541.2 billion in the first half of 2021.

From a total of 30.16 billion shares worth N357.48 billion traded by the top 10 stockbroking firms in Nigeria in the first quarter of 2021, Stanbic IBTC Stockbrokers emerged as the most active stockbroker by transaction value according to the Nigerian Exchange Group’s Broker Performance Report.

Furthermore, having a performance monitoring capability of one’s stocks and bonds remains a major component of stock management. This helps strengthen investors’ confidence in the traded securities. The Stanbic IBTC Stockbrokers Mobile App and online e-trade platform provides a digitised platform where investors can buy, sell and monitor their shares and related securities at the convenience and with the use of their mobile devices and computers..

Similarly, the Stanbic IBTC Stockbrokers website is the foremost site for accessing the latest information on the Nigerian securities market, to guide investors in their decision-making process. Investors can also access stock trend analysis, historical stock information and periodic stock market reports (daily and quarterly) which helps them make the best long-term investment decisions.

With a proven track record of performance and returns, long-term investment through Stanbic IBTC Stockbrokers offers investors the unique experience of being serviced by a team of seasoned professionals who have over the years distinguished themselves through efficient and effective execution with in-depth Capital Market knowledge and expertise.