Generally speaking, investment clubs which are groups of people who collect and pool their money for investment, play a very important role in boosting the saving culture in capital market by youth, as they help them to exactly know where and when to save their money by issuing stock and bonds in which there is a return in a form of interest and dividends thus attracting them more in saving a part of their disposable income to be able to buy more in future. In this essay we will look at how the investment clubs impact the youth saving culture in capital market.
It is worth stating from the
outset that saving in the capital market requires no much money, where
individuals with low income can still save by issuing stocks at the capital
market, the youth who in most cases are considered to be low income earners,
with no jobs or being allocated pocket money they can still save by issuing
stocks at the capital market which will have returns as dividends. But though
they can invest in stocks, they are often discouraged because of the level of
income from their low investments, the lack of knowledge in capital market
operations and the fear of bearing loss alone.
As far as investment clubs are
concerned, they are easy to form whether by amateurs or professionals, their
operations are not complicated as not too much experience is required thus
maintaining them is easier when the participants are focused toward the same
goal. This is far more attractive for youth, as members of such clubs are
putting together their money for more return on saving where together they can
issue either stocks or bonds and share both income and losses from their
investments, which is better than losing alone for as a group the recovery is
quicker and the weight of the loss is less and this will increase the will to
save in youth.
Moreover, engaged members learn
a lot about how to manage their funds and meet valuable contacts interested in
the same topic from whom they gain experience, skills and discipline to improve
their management skills. As they meet periodically dealing with stock market
issues and how it works, this end the bias of the lack of knowledge in the
capital market operations and make them interested to invest their money in
stocks, bonds and mutual funds, because these meeting build in them the concept
of financial analysis and they learn more how to read stock market charts and
quotes.
Additionally, through such
clubs the youth members are free to give their own opinions about suitability
of new investments and the performance of the pooled funds, thus creating the
atmosphere of confidence toward the placement of their funds and bring more
through increasing saving from their disposable income to be invested and thus
boost the culture of saving in the youth members of the clubs in capital market
operations, as they can observe how the pooled funds are increasing in value
and amount, they have the tendency to consume less of their disposable income
and follow the path of saving in issuing stocks and bonds.
It should also be noted that
saving by issuing stocks, bonds and mutual funds, earns more in less time of
maturity than normal bank deposits whether current account deposits, saving
account deposit and fixed account deposits, youth in such investment clubs
prefer to save more of their disposable income in capital market by issuing
securities at the stock market where at the time of their maturity they can
sell them and invest in other ventures when they have raised enough capital.
Therefore, this is one way that youth can use for them to raise capital to
invest in their own businesses and this will boost the saving culture in the
capital market.
In summary, investment clubs
play a big role in boosting the youth’s saving culture in capital market, as no
huge amount of money is a must and members can contribute according to their
means, by gaining also a collective wisdom which is combined with information
from various research which serves to make best decisions, leading to lucrative
capital gain in individual saving and individual wealth which will lead the
members to consume less of their disposable income and save more in issuing
securities at the capital market.
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