Investing in Equity Funds.
August 19th, 2008 Ikechukwu Emelike || ikechukwu@stockmarketnigeria.com
Before you decide to invest in equities, it should be paramount to have an understanding of what it is about. some questions you may find yourself asking may include, if there are risks involved, what it is really about, what objectives it holds, if it is worth it? such questions are but a few of the thoughts that would be running through the mind of the investor.
Equities represents ownership in a company. A company may sell stocks to raise capital and each share of stock represents a piece of the company.An equity fund may hold numerous carefully selected stocks which is believed by the fund manager to achieve a funds stated objective.The objective of an equity fund is long term growth through capital appreciation, although dividends and interest are also sources of revenue. Specific equity funds may focus on a certain sector of the market or may be geared toward a certain level of risk.Although equities are known to be long term performers they also have a history of price volatility than bonds and cash equivalents. Factors which may likely affect an equity investment includes, news about a company, economic developments and changes in interest rates.
Because of the potential long-term rewards equity funds may offer, they are often used to work toward long term goals such as retirement, a child’s college education or buying a home. Because of the risks involved, financial advisor’s may suggest combining equity funds along with lower risk investments as part of an investor’s long term financial plan.
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