Investing in shares can bring you a big return

When we talk about investment, most people think about property. And it is alright to think like that, I mean people mostly want to invest in physical things; things they can see like land, cars, buildings, women, et al.

However, there are other types of investment like cash, bonds, and shares. The title of this piece pretty much tells you that we are going to focus on shares today.

You see, they say sharing is caring, and a lot of companies want to care for you by trading their shares on the stock market. Now before we go too far, you should know that investing in shares carries its own risks but if done well after following advice from your financial/investment adviser, they can bring you the highest return on your investment.

A lot of us have dreamt about owning companies, but we are mostly limited by insufficient capital to start up one. The easiest way to own a company, or at least part of it, is by buying shares. A share is a tiny fraction of a company and if you buy one, you literally own a fraction of that company, however small it is.

Shares can be bought individually which makes you a shareholder, or you can decide to join hands with your wife, side chick and side chick’s boyfriend and form an investment fund through which you can buy shares as a group. Just make sure your wife and side chick are in harmony with each other.

You must now be wondering how to make money off your share investment. Wonder no more. Most companies pay their shareholders part of the company’s profits at the end of the financial year, depending on how big your shares are. That pay out is called a dividend.

So if the company grows over time, the value of your shares grows as well. If you buy your shares from Umeme at Shs5 million and Umeme’s assets and revenue grows in five years, your shares will be worth more than what you initially paid to get them, in case you decide to sell them.

Bigger companies that have long been established pay dividends, although the price of their shares tends to be high, and there is a less chance of rapid growth in the value of your shares. The dividend is quite wholesome because such companies make profits year in year out.

This is in contrast to the smaller companies which don’t often pay dividends but promise a bigger chance to grow and improve your share value along the way. These are riskier to invest in though.

If you have your money ready for investment in shares, this can be done through stockbrokers. In Uganda, the Capital Markets Authority (CMA), a semi-autonomous body that was established in 1996 responsible for promoting, developing and regulating the capital markets industry in Uganda has listed over 23 licensed stockbrokers, investment advisers and fund managers you can contact and see how you can become a company owner through shareholding.

By press time, Uganda Securities Exchange lists 17 companies from East Africa that are currently trading namely;

One of the richest people in the world Warren Buffet once said that “If you don’t find a way to make money while you sleep, you will work until you die.” Your shares will make you money while you are dreaming.