Capital market investment benefits

ADDITIONAL benefits of investing in the capital market sector include: Liquidity: Shares are easily transferable at low transaction cost as compared to other assets such as real estate. Therefore an investor can buy and sell at considerable convenience. Flexibility: Shares are traded in units and lots that are affordable by investors of different income levels. As such, investment in securities can be customized to the specific incomes of investors. Hedge against inflation: Securities prices over the long term tend to outperform inflation, therefore investment in securities can be a reliable hedge against inflation in the long term. Collateral: securities represent stocks of wealth, and can be used as collateral to secure financing such as loans from lending institutions. Confidentiality: Investing in securities guarantees confidentiality in the management of wealth, as financial securities are intangible in nature. Bonus Issue: Shareholders are also entitled to bonus issue, if declared. Depending on the rate declared, it enables a shareholder to acquire additional shares from the company where he/she invested in, without necessarily paying for these shares. Participate in rights issue: Shareholders are opportune to participate in Rights Issue of the company where they invested. Although Rights Issues are paid for by the investors, the price is usually lower than the prevailing market price. Increased transparency and improved price discovery: Widely accessible capital markets also incorporate the maximum amount of information, giving investors the best and most accurate prices. Regulatory protection: Finally it is important to note that among other things the SECZ is charged with the role of protecting investor interests. As such investors are guaranteed of regulatory protection. Investing in capital market goes with a lot of benefits and prospects, If investment decision is wisely taken putting into consideration the viability of the company which an investor wishes to invest, critical analysis of its fundamentals, past financial performance, management structure, business environment, market competitiveness, economic environment and of course political environment, among others.