Investment Advantages And Disadvantages

Out of fear and ignorance, many people don’t invest. Unbeknown to them, investing is a good way to grow your money. What is investing, one might ask? According to legendary investor Warren Buffett, it is the process of laying out money now to receive it in the future. Investing entails an individual committing money or capital to a financial asset or security such as a bond with an expectation of receiving even more money later. Investing allows one to build wealth in the long-term.

There are many advantages to investing. The benefit of an investment is called a return. Returns provide a regular income depending on the type of investment. For long-term investments, it provides healthy long-term returns. Inflation can reduce the value of money.

It is a risky investment because as much as share prices may rise, they may also fall. Also, when the company makes a loss, some shareholders may receive little or no dividends and if the company gets liquidated, they may lose their investment.

This investment option interests me the most because of its many benefits but particularly the fact that one gets to become a part owner of the company and they get to choose who runs the company. Seeing as you can buy stocks in more than one company, one can become owner of many companies and have a say in how the different companies are run.

The Bank of Zambia defines treasury bills as a short term instrument that the Zambian Government issues in order to borrow money though Bank of Zambia for a period of one year or less. The Government uses Treasury bills to raise the money needed to pay off its bills. Treasury bills are bought at a price less than the actual value (face value) and on the due date for payment (maturity date), the government pays the holder of a treasury bill an amount of money equal to the face value. The interest earned is the difference between the price one pays to buy the security and the face value received on maturity date. For example, if you buy treasury bills worth K50, 000 at 10 per cent discount rate, Bank of Zambia will debit your account with K45,000, leaving a balance of K5000.This means that your interest of K5000 has been paid to you upfront.When your investment matures, you are still paid your K50,000.This shows that you were actually paid K55000 for your investment of K50,000. In Zambia, treasury bills are issued for maturity periods of 91 days, 182 days, 273 days and 364