Why informed investors don't plunge into investments headlong

 

Co-operative Bank is one of the institutions that provide asset management services to high-net-worth individuals, institutions of all kinds, andcorporate organisations.

By Evans Ongwae

More by this AuthorA tale is told of a poor Chinese man who, supposedly, invented chess – many centuries ago. He would teach children the game and play with them. One day, the emperor learnt about the game and summoned the beggar to the palace.

What followed shook the kingdom.

The poor man taught the emperor all the chess moves. The emperor was excited. He loved the game! Grateful for the lessons, he then asked the beggar: ‘How can I reward you for teaching me this wonderful game?’

The beggar thought for a while. Then using the chessboard to explain his desire, he requested that the emperor gives him a spoon of rice on the first square until all the 64 squares were full.

The emperor shook his head in disbelief, that the poor man could make only such a humble request. But, when he started filling the first few squares, he realised that the beggar had duped him: Not even all the rice fields would fill the 64 squares. The emperor would lose all the rice and his kingdom!

What the emperor had not considered was the power of compounding. Compound interest is at the heart of wealth creation for individuals, institutions and corporate organisations that put it to work for them. From the assets they have today, they are able to create more wealth using the power of compounding.

These are informed investors who understand that their assets are better managed by professionals who understand finance dynamics – and are able to harness the power of compound interest.

Informed investors do not plunge into investments headlong; they trudge along while being handheld by seasoned experts who keep them from landing on landmines – literary. They put their trust in asset managers who have the skills to not only maintain the assets but also grow them over time so that the client gets real value.

Most individuals and institutions want their assets to increase in value. They, however, know that they must inform their asset managers of their investment objective(s) and their risk appetite.

It is noteworthy that making investment decisions without understanding the client’s objectives from the outset is akin to trying to steer a ship without a rudder.

Asset managers administer the funds or properties put under the care. They put their skills and knowledge to work for their clients so that the assets do not lose the value of disappearing but, rather, increase.

In the country, there are many asset managers who do a wonderful job. They maintain close ties with their clients and inform them of the status of their assets. They advise their clients on the right financial moves to make so that the assets grow in value.

Co-operative Bank is one of the institutions that provide asset management services to high-net-worth individuals, institutions of all kinds, and corporate organisations.

To learn more about Co-operative Bank’s asset management solutions, visit https://co-opbank.co.ke/investing/co-op-trust-wealth-management-services.