20/09/2023
INVESTMENT, A VEHICLE TOWARDS WEALTH BUILDING.
Alright everyone, I know over the past couple of months I’ve been blabbing about investing, and giving bits of information, but today It’ll be different , I’ll be giving some keys and vital essentials to.
So first what is INVESTING OR INVESTMENT ?
In simple plain texts, Investing Or investment is the process of Putting aside money(principle or capital and funds) into something(investment vehicles) in expectation of returns(reward), and also the acknowledgment of a possible of loss of funds(risk), you can’t invest successfully without accepting the possible risk of losing your money.
What can I invest in?
There are different vehicles or mediums through which one can invest or start their personal investment journey. And like every considerable feats of human developments, there are different vehicle classes which service different income brackets. Basically there are a lot of investment mediums you can start with as little as #5000(low entry barrier) and as much as your pockets permit.
we have investment vehicles like;
- Buying Debts: Bonds, treasury bills, Certificates of deposits, commercial papers; Low risk, Low return, Low entry barrier.
-Equities: Stocks,ETFs, Mutual funds, Private equity; Risk ranges, returns ranges, entry barrier ranges.
-Commodities: Precious metals and gems (Gold and Diamonds etc), Grains(Rice, wheat etc ), Oil; High risk, high Return, barrier ranges.
-Currency(Crypto): EUR, USD, Pounds, BTC, ETH,BNB; High risk , High return, Low barrier entry.
-Real Assets: Real estate, Collectables; Low Risk, High returns, High barrier entry
-Personal Business: Building a business( ranging from sole proprietorship -LTD-PLC); High risk, High reward; Barrier ranges.
-YOURSELF: courses, books, Time, and Networking, your physical appearance ; Low risk , High returns, Low barrier entry.
SOURCES OF INVESTMENT CAPITAL
Alright when we talk about investment, what comes to the fore front of our minds?
Yes money,
Capital to get the ball rolling.
Well good news, you don’t need to be Otedola or dangote to get the ball rolling.
All you need is financial discipline and a plan, which which boils down to personal finance, and the subsets are budgeting, and savings and a financial planning. And for starters, people like you and me, this 3 points would prove valid in helping to establish the solid background we need.
Firstly
-Budgeting: This is the base amount that keeps you alive, healthy and comfortable for a specific period of time, without any extra unsolicited spending.Budgeting your expenses can be achieved by having an estimate of your basic expenses( which includes feeding, clothing and other essentials ) per month, with reductions in expenses, liabilities and other Miscellaneous.
—Savings: This involves putting aside part of your income for future purpose, as this would be a source of funding for your goals towards financial freedom.
-Financial planning: this is where the whole cooking and discipline happens, this involves laying down a specific road map towards your financial goal, starting with short term goals like ( how many % of income would go into savings, how do I stay within the range of my budget?, what cost cutting measures do I have to implement?, how do I effectively invest my money? And lastly how can I be better tomorrow?, learning from yesterday’s mistakes?) all this and others you’d learn on your own, and all experience coupled together would compound into making you a better person.
KEY THINGS TO KNOW.
Your investment journey, is a journey of a life time, similar to any journey in any aspect of your life, they don’t always come easy, they don’t come on a platter of Gold.
if they do then everyone would be ultra successful at it, in-fact only 10% of people starting out now would become an ultra successful investor, but that doesn’t mean you can’t also invest for a far better tomorrow so you don’t have to work at your old age , and also having enough to buy you and your family a comfortable life. Like they say
“ Shoot for the moon. Even if you miss,
you'll be among the stars”.
However while shooting there are some key elements and tips you should have in mind on your journey.
-IT STARTS NOW: Start now because the earlier you start, the bigger and better your reward would be. One of the most valuable Asset we have in this world is ?? Take a guess ? No not Diamonds or real estate, it’s TIME, and one fact is we have more than enough right now. I’m guessing most people reading this would be between the age of 18-25, and the average life expectancy is 75 years . So basically we have about 2/3 of our life left, of which we are in full control. So make wise use of your time, read books on investing, watch YouTube videos on personal developments, stop scrolling endlessly on social media, and most importantly take advantage of COMPOUND INTEREST.
Albert Einstein famously referred to compounding interest as the eighth wonder of the world. He went on to state that those who understand it, earn it and those who don't, will pay it. It is therefore important to understand what interest is, where compounding interest fits in and how to use it in your everyday life.
-NEVER TAKE A HUGE HIT: If there is one thing that can jeopardizes your effort of financial success it is greed, and a really huge risk appetite. Warren buffet once gave two rules for success in investing:
”Rule no 1: Never loose money big
enough to wipe your game.
Rule no 2: Never forget rule no 1”
that said, loosing money is a norm while investing, but avoid loosing a huge chunk of your capital or worst of all, your whole capital. you're Goal should be to stay in the game as long a possible, and maximize returns and don't forget to do your due diligence before you invest your capital, while having it in mind to never lose enough to kick you out of the game, be calculative, and apply proper risk management methods.
-NEVER INVEST IN SOMETHING YOU DONT UNDERSTAND: Starting my investment journey, I was basically a young lad with no knowledge, but I had little funds, cutting the long story short, I lost everything and that taught me one valuable lesson, put your money where your mouth is. If the picture isn’t clear enough, do not invest. Your money intended to invest in diamonds should be given to a rare gem dealer rather than a sheep seller(richest man in Babylon ). This I learnt by attending the school of hard knocks, You need to know this too, never risk your money without understanding what you’re getting into. NEVER, as a starting investor that is why investing in startups is a bad idea, you’d rather want to invest in a publicly traded stocks which have a proven strength of time with a strong and solid fundamentals. But do your due diligence in other to avoid the pit falls of lost funds.
-HAVING A GROWTH MINDSET: it is not enough to be willing to invest or have the funds to, you also need to adopt the right mindset.
As I said earlier, success through investments takes time and it is also a continuous and never-ending improvement journey, you need to work hard on your mindset as much as you work on your Job, because the only worthy foe of success is yourself.
- EMPLOY PROPER RISK MANAGEMENT METHODS: it is a vital process for an investor to identify, assess, and mitigate potential threats to their goals. It involves:
1.Identification: Recognizing risks from both internal and external sources.
2. Assessment: Evaluating risks in terms of likelihood and potential impact.
3. Mitigation: Developing strategies to minimize risks through safeguards and contingency plans( like Dollar-cost averaging )
4. Monitoring: Continuously overseeing identified risks and adapting as needed.
Effective risk management is crucial for informed decision-making, asset protection, and long-term success. It helps strike a balance between seizing the opportunities and safeguarding against adverse events in an ever-evolving world .
-KNOW YOURSELF : It is not enough to know about the market, Knowing yourself is a cornerstone of successful investing. Understanding your risk tolerance and appetite, financial goals, and investment horizon is essential. It allows you to create an investment strategy that aligns with your unique circumstances, helping you stay disciplined and make informed decisions in both bullish and bearish markets. Emotions can cloud judgment, so self-awareness is key to achieving your financial objectives.
10 POPULAR BOOKS THAT WILL CHANGE YOUR LIFE:
Personally, these are the books that helped me and are still helping me start out in my investment journey.
1. Think and Grow rich- Napoleon hill
2.Rich dad poor dad- Robert Kiyosaki
3. Rich Dad's CASHFLOW Quadrant: Rich Dad's Guide to Financial Freedom- Robert Kiyosaki
4.Rich Dads guide to investing - Robert Kiyosaki
5. The richest man in Babylon- George S. Clason
6.Basic finance- Herbert B mayo
7. Why we want you to be rich- Donald trump and Robert Kiyosaki
8. The richest man in Babylon- George S. Clason
9. introduction to fundamental analysis
10. The Monk who sold his Ferrari.
