WHY THE CAPITAL MARKETS AUTHORITY (CMA)?
Capital markets are a significant component of global financial markets. Traditionally, they have played significant roles not only in the context of developing the private financial sector but also the national economy at large. Hence, the role of the Capital Markets Authority, an independent regulatory authority concerned with the development of the capital markets and the protection of private savings invested in financial instruments, becomes of significant importance.
INTRODUCTION TO INVESTMENTS
Before beginning any investment activity, a successful investor needs to define a well-structured strategy. This includes knowing how to identify the investors’ current financial situation. Start here with an analysis of your income, expenses, assets, liabilities, cash flow, net worth, and other important factors that will help shape your investment decision process.
FINANCIAL MARKETS: THE INVESTOR’S TURF
After highlighting some of the principal notions to address when considering an investment, let us introduce you to the basic concepts of Financial Markets. Financial markets are a marketplace for trading securities, derivatives and other financial products, subject to economic concepts of demand and supply.
FINANCIAL PRODUCTS & SECURITIES
Financial products—from bank products to stocks and bonds—are like tools that can help you achieve your financial goals. Learn the features of various types of investments and the ways each can put your money to work.
COLLECTIVE INVESTMENT SCHEMES
Collective Investment Schemes are made up of a supply of capital belonging to numerous investors that is used to collectively purchase securities while each investor retains ownership and control of his or her own shares. Collective Investment Schemes are in fashion due to their nature which provides a broader selection of investment opportunities, diversification prospects, greater management expertise and lower investment fees than investors might be able to obtain on their own. Investors opt for funds because they do not make decisions on how the fund’s assets will be invested. They simply choose which fund to invest in based on its strategy, risk, goals, fees on knowledge & trust of managers, knowing however that past performance does not guarantee any present or future profits.
ALTERNATIVE INVESTMENT SECURITIES – DERIVATIVES AND STRUCTURED PRODUCTS
By definition derivative is an instrument whose value derives from an underlying asset and is dependent on the value of the same underlying asset which can be a commodity, a security or even a currency. These derivatives are mainly designed to be used as hedging tools and reduce the risk faced by organizations and individuals. Such products are considered as Alternative Investment Securities.
When it comes to risk, here’s a reality check: All investments carry some degree of risk. Stocks, bonds, mutual funds and exchange-traded funds can lose value, even all their value, if market conditions sour. Even conservative, insured investments, such as certificates of deposit (CDs) issued by a bank, come with inflation risk. They may not earn enough over time to keep pace with the increasing cost of living.
Every investor must have a specific investment strategy which helps direct his investment. The Investing strategies can vary from Growth Investment to Income Investment to Capital Preservation. This section also features tips to manage concentration risk when building portfolios.
EVALUATION OF INVESTMENT PERFORMANCE
To assess how well investments are doing, an investor needs to consider several different ways of measuring performance. The measures he chooses will depend on the exact information he is looking for and the types of investments he owns.
Consider this section if you are looking for tips on how to evaluate the performance of your investment.
CHOOSING THE RIGHT FINANCIAL ADVISER OR BROKER
Choosing a Financial Adviser is an important decision. A Financial Adviser can help the investor set financial goals, choose investment strategies, identify suitable investment securities and track progress. This section will help the investor better understand what to consider when choosing the right financial advisor/broker. Disclaimer: The Capital Markets Authority has made available on its website information for educational purposes. Such information should not be regarded at any time as professional investment advice. The CMA does not accept liability for the website being accurate, complete or up-to-date or for the contents of external links when available.In no respect shall the CMA incur any liability for any damages, including, but not limited to, direct, indirect, special, or consequential damages arising out of, resulting from, or any way connected to the use of information on the CMA website. The Investor Education portal of the CMA website contains certain educational material made available to the CMA by the U.S. Financial Industry Regulatory Authority (FINRA), www.finra.org