02/09/2020
Investment ..💰💰💲💲
Buying Shares in the Stock Market - An Investment Option for Native Fijians.
I had written awhile back on how native Fijians should inculcate the habit of saving and investing.
In this post I will explain about investing in the stock market. I am targetting native Fijians here as we lack the financial literacy and discipline to invest and to be patient.
The stock market is where companies who have decided to seek public funding are listed. This offers the general public the opportunity to buy shares in the company and become part owners of the listed company.
And the best time to buy shares is when the company is intially listed for the first time this is called the Initial Public Offfer (IPO) and the logic here is to buy the shares early with the anticipation that the share price will increase and you can then sell your shares when the price goes up and you can realise a tidy profit.
How do you get your returns on shares?
1. The share price increases and you can then sell your shares and get a profit.
2. Some companies offer an annual dividend.
How do share prices increase?
1. Through the law of supply and demand.
There is only a limit to the number of shares. For instance a company may only have 100,000 shares. When this is all sold you can only buy shares from those who have bought this 100,000 shares. For instance, I could have bought Fijian Holdings Ltd shares at 50 cents and knowing that people may be interested in buying the shares of FHL, I then list that I am willing to sell my shares at 70 cents which is 20 cents more than the original price of 50 cents I bought it for.
Say I bought 20,000 shares at 50 cents, and I sell at 70 cents - my profit is 20 cents per share so my total profit will be 20,000 × 0.20 = $4,000.
This is the crux of making money in the stock market - you buy shares at a low price and sell at higher price. It's simply like the middle man in the market he buys dalo at say $10.00 a bundle and sells it at $15.00, and he makes a profit of $5.00 a bundle.
The price of dalo the middle man sells at depends on demand. If there is a demand for dalo and there is shortage of supply he can even sell the dalo at $20.00 per bundle. The same goes for shares the owner of the shares can wait till the price of shares doubles due to demand before he sells his shares.
RISKS - Buying shares is medium to long term investment. You buy the shares and wait for the price to go up which can go up quickly or will take 2 to 3 years before you sell your shares. The risk is shares can fall below the price you bought it for and you can make a loss. So you have to study the Annual Reports of the company to ascertain that it is growing and making profits. The health of the company directly affects its share prices. And be patient share prices fluctuate if you invest in a solid company the share price will go up again. So far I have advised native Fijians to invest in Fijian Holdings Ltd and they are doing quite well.
Levu Dina Grog Club a Success Story.
When I joined our grog club I found that we were wasting many hours just swiping grog so I decided to start an investment club. Members were obliged to give just $10.00 a week.
And I made a ruling that no member could withdraw until after 3 years. We were able to collect around $38,000 and bought shares at Fijian Holdings Ltd. We intially bought the shares at 40 cents. This is now our 4th year and we have total shares of 90,650 shares.
And the present share price is $1.18 cents
So 90,650× 1.18 = $106,967.
The share price is likely to go up again when the economy recovers
So from an investment of a little over $38,000 over 3 years we have a profit of approximately $106,967.00.
We are still giving our weekly contribution of $10.00 a week and we are aiming to reach a minimum of $200,000 by year end. If a small grog club can make this investment and commitment to be patient. I believe it can be replicated in our villages, yavusa, mataqali and individuals and clubs. I am even starting one at home among my tenants.
I have heard of the thousands of dollars earned by grog farmers but who is advising them to invest wisely whether in real estate or the stock market. They could in my opinion be millionaires as they now have the funds to make more money.
Let's start at home and advise our children of this investment option.
I am of the firm belief that native Fijians have the potential to compete favourably with other communities all they need is good advice, guidance and the discipline, determination and perseverance to carry it through.
By the way Fijian Holdings Ltd is only accessible to native Fijians and was established to assist them to have a foothold in Fiji's commercial sector. There are several other companies listed in the stock exchange which is open to all and non- iTaukei can invest in them. The same rules and discipline applies.
Those who are interested in investing in Fijian Holdings Ltd can inbox me to connect you to a licenced Stockbroker.
I am always hearing of the financial success of our Indo Fijian community but these habits of saving and investing are not racial, black, white or brown you follow them and you will eventually reach your financial goals whatever ethnicity you are.
Below I am receiving a cheque from Mr Kitione Radrodro for $14,000.00 for members of the Levu Dina Investment Club which was invested with Fijian Holdings as I mentioned above and one member will be receiving $10,000 and another $4,000 . Last week two members received $4,000 and $3,000 respectively from the sale of their shares.
The Investment Club also withdrew funds to start a Loan Scheme among members to assist them during these hard times.
This is the value of saving and investing it is helping a lot of members in these difficult times.
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