TODAY’S TOPIC ON INVESTMENT AND AN INVESTOR Dear friends: I take this opportunity to present this topic in the hope to better raise your awareness and understanding of the subject which starts with a question: What is investment/ Ngo ma Lim Ajenga? And who is an investor/Nga ma Lajenglim? Investment in simple language is to put money to do work which is hoped to create or make more money than originally put or invested. The person who puts/invests that money is called an investor/Lajenglim. Usually investment is carried out by rich individuals and or companies with the money they earned as profits from businesses they have been conducting earlier. The profit money is then put aside as risk capital/limakala to put and in another business area where it is expected to make money on its own, which means investment is money put to make money by itself for the one who put it or invested it. With risk Capital, it is meant that the invested money in a business always carry risk, where there is no certainty that it would generate profit after investment. For example a Lira Ranch Investment company goes to Gulu and finds a partner, Gulu Ranch holding Company Ltd. They sign an agreement where Lira Ranch Investment Company will invest 250 million shillings on large scale maize farming in one of Gulu Ranch Holding Company’s empty lands, with agreed term of business being equal share on earned profit. And here is how to understand the risk capital notion/idea, assuming that everything went well up to the point of blossoming maize plants, and suddenly it stops to rain leaving a quarter of the field with unproductive spoiled maize. Because the performance of any business is calculated on cost benefit analysis, that is calculation with expectation to benefit you most, and the result of it to be known by sale minus cost, in this case we say sale was 275million-250 then the profit will only be 25 million. Assuming it only rained for a month with no production at all then we can say the risk was total, where the invested amount all went to the flame of the sun with total loss. And to conclude, please note that the word capital is another word for “invested money” “Limajenga”. The next time I will bring you the topic on Partnership, Joint Venture and Merger. Thank you and have a great night, evening or morning wherever in the world you are.
Posted on: Wed, 31 Jul 2013 02:20:57 +0000
Trending Topics
Recently Viewed Topics
© 2015