It is very easy for people to save. In fact, for many, savings is their final stopping place, giving themselves that pat on the back as they see how much they could store up over time. Inasmuch as it is financially wise to store up money in very liquid funds for emergencies and the likes, it is as much financially wise that a proportion of your income goes into investments. We can’t multiply our finances by saving, we do that by INVESTING.
Investments are assets or items acquired with the goal of generating income or appreciation. It is the process of using your money or capital, to buy an asset that you think has a good probability of generating a safe and acceptable rate of return over time. Investments can be stocks, bonds, mutual funds and, derivatives, real estate, jewellery; anything an investor believes will produce income, usually in the form of interests or rents. (Extracted from WallStreetMojo)
Here are a few hints to note in the journey of multiplying your wealth (investing):
- You should have an allotment from your income going into investment (it shouldn’t be less than 10%). It is also advisable that you deduct this allotment first. We can’t afford to spend on other things first and hope to use whatever is left to invest or build an emergency fund because the truth is that nothing ever remains. As long as there is money, expenses keep opening up.
- Your investment should be goal-based. You shouldn’t be investing if you don’t have a goal in view. An understanding of why you are investing will enable you to know the best investment plan to choose. Likewise, you shouldn’t be investing in a scheme because someone else is investing in that scheme. You two may have different investment goals.
- You shouldn’t invest in what you are not well knowledgeable about. You should not just invest with the leading of your emotions or the crowd, do your research well and make informed investment decisions. Amazingly, information is at your fingertips. You can be aware of existing investment opportunities and make intelligent investment by signing up for newsletters of financial institutions. You get to receive intelligent investing news, data, analysis and research easily. Examples of such are Proshare Nigeria, Anchoria Investment and Securities Ltd., Meristem Securities Limited etc. In short, most Securities Companies have their research arms from which you can get valid information.
- Heard of an investment club? An investment club is a group of people who pool their money to make investment. Apart from the advantage that you get to earn more with the power of many, you also have a good opportunity to learn from other’s knowledge and experience plus it gives you a financial commitment. However, do note that for investment clubs to operate efficiently, there should be a good structure in place and a common philosophy. For more on investment clubs, I recommend the book, Investment Clubs by Tomie Balogun.
- Think long term. Your investments shouldn’t be only to earn returns that are short term or medium term. It shouldn’t just be about the present only. You should also invest in assets that will keep earning returns for you in your old age and for your generations to come. Think long term; think trans-generational.
We believe in you!
To your financial independence and freedom
Module 7: Multiply your Wealth