Saving your money is great but the interest accrued when left in a savings account is not much. After capital is accumulated, the next step should be making investments. Warren Buffet explains investment as the process of laying out money now to receive more money in the future. You need to let your money work for you. Here’s what you need to know;
Seek Knowledge Before You Invest
Before you invest in a venture or an industry, have enough knowledge about it. Invest in industries you are well-informed of. Following fads can lead to loss of capital. If an investment plan is too good to be true, probe further.
Understand your level of risk aversion.
How much risk can you take? After performing a thorough research on the venture you plan on investing, how much are you willing to lose if the need be?
Your risk aversion should inform where you invest and how much. Long-term investments like stocks are risky but accrue more interest with the right performance and time. On the other hand, short-term investments like mutual funds and treasury bills are safe and accrue lesser interest. Start where you can and increase your love for risk.
Invest in Yourself
You’re your biggest project. Invest in your education. Pick up courses online. Go back to school if you want to. Polish your communication skills. Learn about digital marketing. Learn a new language. Build your confidence. Add value to yourself. It will pay off eventually. Find a way to get better. That way, even if your investments fail, you can easily make money with all the value you bring to the market.
Invest in more than one venture
Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land –Ecclesiastes 11:2.
When it comes to investment, do not put all your eggs in one basket. Diversify. Buy stocks in different companies, own a real estate fund, build a business, invest in a farm or a couple of young men working on an intriguing idea. Allow different ventures to fetch your wealth.
Now, investing is much easier. Read more. Ask questions. Be bold. Take calculated risks. Give it time. Get rich slowly.
PS – This series is a huge learning curve for me. Every week, I read a book on money and finance. This week’s book is The Intelligent Investor by Benjamin Graham. Check it out.
Also published on Medium.