Expert urges Investors to consider financial goals before buying Dangote refinery shares

By AbdulHakeem Salami

Prospective investors in Dangote Refinery have been advised to consider their financial goals, risk appetite and ability to leave their money invested before subscribing to the company’s shares.

The advice was given by investment analyst Adeniji Sheriff during an X Space hosted by The Lagos Voice on Sunday, titled “Dangote IPO: Investment Opportunity or Social Media Hype?”

Speaking on what prospective investors should consider before investing in the refinery, Adeniji cautioned against making investment decisions based solely on expectations of doubling their money within a short period.

He said investors should understand the company and assess whether its potential growth aligns with their investment objectives.

“If you want your money to double within a year, you need to look at the company and the business it is doing and ask yourself whether you realistically believe it can become two times its current value within that period,” Adeniji said.

He explained that an investor expecting their investment in Dangote Refinery to double within a year would effectively be expecting a significant increase in the company’s value within the same period.

According to him, investors should manage their expectations and determine whether their financial goals are suited to a one-year, three-year, five-year or longer investment horizon.

Adeniji also advised prospective investors to establish a financial structure before committing money to investments.

He said individuals should first take care of their essential expenses and bills, build emergency savings and then invest money they can afford to leave untouched.

“You need to be able to divide your earnings into paying off all your bills, then after that having emergency savings, then after that investment,” he said.

He added that an investor’s decision should also depend on how soon they may need access to their money.

According to him, individuals who may require their money urgently should consider the liquidity of an investment before committing their funds.

He described liquid investments as those that can relatively easily be converted into cash, noting that investors need to determine whether they can survive financially without the money for the period they intend to remain invested.

Adeniji identified capital preservation and long-term growth among the reasons people invest.

He said while some investors may seek to preserve their money rather than spend it, others may be looking to grow their wealth over time.

He therefore advised prospective investors to determine what they want their money to achieve before choosing an investment.

“You need to understand your risk appetite,” he said, stressing the importance of knowing whether an investor can afford to leave their money invested for an extended period without needing it for immediate financial obligations.

Adeniji also explained what purchasing shares in Dangote Refinery means for individual investors.

He said buying shares makes an investor a shareholder in the company, giving them certain rights, including attending Annual General Meetings, asking questions, making suggestions and receiving dividends when declared.

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However, he noted that becoming a shareholder does not mean that an individual’s suggestions will necessarily determine how the company is run.

He explained that the level of influence a shareholder has depends partly on the company’s ownership structure and the proportion of shares they hold.

Adeniji advised investors to understand not only the potential financial returns from buying shares but also what their ownership of the company actually represents.

The analyst’s comments come amid interest in the Dangote Refinery share offering, with some prospective investors viewing the opportunity as a way to increase their wealth.

Adeniji, however, urged investors to look beyond expectations of quick returns and consider the underlying business, its prospects, their personal financial position and how long they are prepared to keep their money invested.

He said investment decisions should be guided by an individual’s financial goals and risk appetite rather than public expectations about how much the investment could return.