As teenagers, many of us may have heard our parents lament over one financial decision or the other; from failing to buy a land when they were much younger or not investing in a company when the share price was affordable, to hastily investing in a get-rich-quick scheme that backfired. While they may have dropped the ball during their peak days, investing was much more difficult than it is today. Our parents had little access to important information needed to make more informed decisions, they relied only on hearsays, word of mouth and what they were sold. Research was a luxury, accessing data and comparing investment opportunities was almost impossible; all these made the world of investment a mystery to them.
Today, as adults (including young adults), we are responsible for our future and we need to take advantage of the information and technology available to us to make better financial decisions and break the cycle of regrets. Thanks to the technological innovations in the financial services sector, everyone can easily make investments online via mobile apps.
What is an Investment?
An investment is an asset or item that is bought with the hope that it will generate income or appreciate in value at some point in the future. Bonds, stocks, and real estate properties are some examples of assets people invest in. Investing can help you maximise the amount of money you can earn, so you can grow your wealth and have greater financial security when you head into retirement.
In this article, I will share 5 investing tips for every beginner venturing into the world of investment.
Audit Your Finances and Start Saving Early
To start investing and making your money work for you, you need to have money saved for this specific purpose. Most people do not save money because they believe they do not earn enough, but the truth is that most people do not pay enough attention to their finances.
Here are some things you can try:
• Logging your daily expenses so you know exactly what your money is being spent on.
• Cutting back on unnecessary spending in order to free up cash for savings and more important expenses.
• Creating and sticking to a monthly budget to ensure you do not fall back into your old spending habits.
• Prioritising and automating your monthly savings to meet your goal of investing it when the time comes.
• Linking and funding of prepaid card.
Remember, you cannot invest money you do not have.
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Invest in Your Financial Education
You don’t have to be a guru to make wise investment decisions, but you need to educate yourself enough to understand the market and know which factors to look out for. Here are some ways you can do this:
• Reading books about the basics of investing.
• Attending masterclasses hosted by notable financial advisors with great track records (book personal sessions if you have to).
• Getting mentored by experienced investors, either in person or by following their teachings.
• Learning from online courses and YouTube videos on the subject.
• Consulting with financial advisors to get clarity on specific areas of investments.
• Reading the business news, research reports from financial analysts, and keep an eye on the trends and activities of the companies you’ve invested in.
Start Now and Start Small
You don’t need to wait until you become a billionaire before you can start investing. Once you audit your finances, start saving, and start getting familiar with the investment world, it is time for you to take the leap and get your foot in the door.
Investing today is as simple as ever with banks like UBA offering easy ways to invest on their platforms. A good piece of advice to new investors is to start with simple investments, then incrementally expand their portfolios.
You can start investing with UBA’s risk-free fixed deposit account. Once you see your money making more money for you, your mindset towards money will be transformed for good.
Diversify Your Investments
Diversifying your investment is the safest way to invest. As you progress in your investment journey, you will come across various triggers to get rich quick by putting all your money into a few hot stocks being hyped at one point or the other, do not fall for it.
Because, historically, investments in different sectors of the economy fluctuates depending on what is happening at the time, the path to long-term wealth creation is building a diversified portfolio of stocks, bonds, real estate, and other asset classes.
When it comes to investing, do not put all your eggs in one basket.
Be Patient and Focus on Your Financial Goals
Nothing good comes easily especially investing. Making the decision to start investing is a struggle with your basic instinct to spend as you earn and live from pay check to pay check. You will need to be patient with yourself and focus on your financial goals in order to change your lifestyle for good.
Patience is a challenging skill to learn in the face of a market crash or boom. Experienced investors see market crashes as a time to build their portfolio at a discount, and a market boom as an opportunity to either sell at a higher price or hold on to their investments for the future.
While not without its risks, investing for your future is the most reliable way to increase your chance of amassing wealth and living the life of your dreams, start investing today!