Personal Experience Of Capital Markets Investment Club in MUBS.
By: Muhwezi D - C/man CMIC.
Investing is something we do every day. Be it with people we relate to, the activities to which we allocate our time or even more importantly what we spend our money on. It was not until September 2007 when I participated in the Capital Markets University Challenge that I learnt how to become a “wise” investor. This Challenge involved the participation of many second year university students all over Uganda yet only three best students from three best universities would participate in the final phase of the competition. I had heard about the Capital Markets before but not understood its real essence. The challenge started off with the first phase of writing an essay to the set question – “How can a university student create wealth through Capital Markets?” After going through this stage successfully, there then comes the second and final phase of the competition; The most interesting and the most challenging. The finals required the successful students/universities to set up Investment Clubs (ICs), start an income generating business on capital of UShs 100,000. With two other finalists from Makerere University Business School, we set out to recruit new members to establish a lasting investment club that would help members and the public to embrace the usefulness of capital markets in wealth generation.
According to the rules of the competition, this club was supposed to be set up, operated and demonstrate possibility of continuity and sustainability within three weeks. It wasn’t therefore all that easy. Never had I known that this was to pave my way to investing while still young. I developed more courage after remembering the words of: Peter L. Bernstein, “The road to success in investing is paved with independence of spirit, decisiveness and the courage of one’s conviction”, and Cesare Pavese, 1908-1950,“To know the world, one must construct it”
Immediately after being given the task, we started advertising for recruitment for the new club to exist in Makerere University Business School. In November we held the first meeting of the pioneer members, chose the investment priority and structured the administration of which I was elected the club chairman.
Before all this, I had thought that capital markets were for rich people who have big businesses. However, with the investment club experience I have learnt that even people with small or even very small businesses can buy shares and even invest in the Collective Investment Schemes (CIs). After reading about the oldest investment club formed in Detroit by Fredrick C. Russell in 1940, it even gave me more drive. Fredrick’s club started as a mutual club of six people but currently the membership has tremendously multiplied and currently it has a portfolio of over $ 6 million and is still active. (About investment club.com)
The Capital Markets Investment Club (CMIC) of MUBS within a period of less than a year has invested in shares of Stanbic bank (over 2900 shares) and has money to invest in any upcoming Initial Public Offers (IPOs). This has been a great experience in relation to financial and capital markets. With my little money, through the club it has been possible to pool funds and be counted among the “wise investors”. From my experience in the investment club, I decided to purchase shares in Stanbic Bank Uganda besides the investment club-an opportunity I never at one time dreamt of. The lesson realized is that before one participates in the capital markets, one may not easily realize the value and the benefits of this kind of “wise investing”.
In March 2008, the investment club hosted visitors from Capital Markets Authority Kenya and they gave support towards the business in Makerere University Business School carried out by the club. You can imagine what kind of business this was! It was not a big or an every one’s attractive business but just a “kabalagala” (local pan cakes) business. On the MUBS campus, talking about capital markets is now a usual phrase for “good” investors.
“Just with a small business as small as frying and selling pancakes, one can invest alongside great men in company shares? One can sit with tycoons in a company Annual General Meeting and influence decisions?” One MUBS student asked me when the investment club had been formed and had invested in securities.
The investment club has grown so much that we are even approached by parents requesting that we grant club membership to their children to invest with us.
However, behind every success, there are challenges. Yes it is true that the investment club has been growing tremendously but there have been many challenges. For instance balancing between academic pursuits and the club activities. However, this has been overcome by transforming the club from pancake business to savings scheme. This in most people’s ears sounds to be something big, isn’t it? It may be or it may not but the whole question is “Where did the club start?, How much did it start with and how has it grown to that level? The answer is simple- the investment club started small but is growing big because it invests in securities and CIs through which members have learnt how to save and invest.
You may just wonder, most of the club members have individually invested in stocks on the Uganda Securities Exchange and in CIs at African Alliance Uganda. This is so because these members have realized the secret in capital markets as an avenue for accumulating wealth. With only Shs 50,000 initial investment, one can invest in CIs and by buying a minimum of 100 shares of any given company one can invest in stock. One third year student who was helped by the club to invest her Shs 60,000 in shares was so excited about the investment she had made. After the Stanbic Bank Annual General meeting, she invited me for dinner and said, “I was so excited to see myself seated with important people even with my little investment of Shs 60,000! I wish I had known before. I will continue to invest in shares so that my investments can grow”. Currently her investment has grown to more than Shs 150,000.
Who does not want to accumulate wealth through honest means? The basic idea behind investment is to begin small and grow big by investing as much as we can save. From my experience in the Capital Markets investment club, I have learnt that humble and small beginnings in the investment world results into great investments. From my experience, most people ask “How can a simple person like me invest on the Capital Markets?” With any small business one may carry out whether for “kabalagala”, tomatoes and onions or others, it is possible to invest and enjoy the benefits of the capital markets. The market is not segregative, it’s for everyone to participate and enjoy its fruits despite of level of income, status and any other consideration. Nonetheless, remember to invest wisely, to protect your investments.
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