Investing For Beginners Class 101

Investing For Beginners

Let’s speak about money. After all, Naijblack is all about making money. 

You are probably reading this article because you need to know how to save money. 

Or you are some financial guru who will  want know what I have written. 

Your reason may not matter, we all need to invest money at some point in our live.

Saving money for the future is paramount!

You maybe saving money for lifestyle, for a brand new car or some private agenda. 

Whatever the reason for saving money, we all need to understand Investing For beginners! 

Individuals look for way(s) to save money for various reason, maybe because they have a single source of income, or maybe they have multiple sources of income. 

Irrespective of the source of income, we need to create financial stability for a better tomorrow. 

I know I’m at the point of creating financial stability right now!

I was raised from a poor family, and I always know how to account for every single Naira I earned and spend. 

I was taught the art of saving by my parents. When I’m broke and in a dire situation, the money i have saved always come in handy.

To become successful as a businessman or just a student, you need to understand the basis of the investment.  

And when you have understood the art of investment, you can find the proper way to invest  your money that will secure your future.

To truly understand investment is to diversify the source of income, thereby increasing the input and maximizing the output/outflow of money from your pockets into your economic life.

Wealthy people are always looking for ways to invest more money into businesses, while the poor, is always spending the little he/she has accumulated.

People who have not invested in anything in their lives before always find it difficult to invest especially with money. 

And at some point, they claim they can’t invest because they cannot muster the strength and will to invest.

Others have read about people financial failures and they become sceptical about investing. 

To invest, one needs knowledge and readiness, willingness and the courage to take the bold step.

After taking that bold step, your life will never remain the same again!

You need to have the knowledge first and then find the WILL to invest. 

To have the knowledge, you need to read through this article…

Your Financial Source

The preparation that meets opportunity is equal to success! You can’t beat that, nor can you run away from that. 

And therefore, you need to manage your financial source.

You can’t really prepare if you can’t manage your financial source, can you? 

It is therefore paramount that you acquire the right knowledge, prepare your mindset and become a successful investor in the 21st century.

In as much as you’d like to start investing, you need to understand your financial capabilities. 

The reason has been, the cost of living keeps jumping higher and higher every day.

First, how much do you earn per month? What is the reason for investing, to what end must you have what you are investing for? 

Investing For Beginners

Having these perceptions, coupled with determination can go a long way in curtailing your spending.

That amount of money curtailed by perceiving the need for the future and having a determination becomes the money for investing.

Note that, to start an investment, you don’t need a large sum of money to do that. You can begin with 10% of your monthly income. 

But then, knowing what the money is meant for, you can save up to 20% of your salary before you move into investing.

Learn the Principles of Investing

I wasn’t born with a silver spoon neither was I raised to understand the financial aspect of life. I was only educated on the act of saving money for raining days.

Here are the good tidings ...

You don’t have to be a financial expert, neither must you read Banking and Finance. 

You just need to learn the basic principles of investing by taking a decision on your future and what you really need in life.

During writing this article, I came across James McManus the owner of Nutmeg and he wrote a wonderful piece titled The six Principles ofinvesting everyone should know 

The principles of investing may seem complex, sometimes ambiguous and constantly evolving. 

It would be good for you to get familiar with the terminologies, theories of profit and loses in order to fully optimized, synchronized and amplify the possible outcome of every investment.

It is important to go to school and acquire some skills that can make you money in the world, it is also important to become financially literate. 

There’s no two way about it, nor a short cut to it. You need to learn the basic principles of investing in order to invest properly.

You can start learning the principles of investing on your own, don’t trust strangers with your money and hope to have huge returns at the end of the day. 

Study that you can find yourself approved in the financial industry to start making money.

What is the Purpose of Investing?

Of course, you are reading a blog post about investment right now. 

What is your purpose of reading it? If you can answer the question, then you can also answer this question-

What is your purpose of investing money?

Although you have known your financial source and you are willing to invest, you need to find the purpose of investing. 

While many people are investing in Transport Business, Real Estate, Agriculture and other fields of endeavour to make money, their goals, mindset, wants and needs are entirely different from yours.

                                                               image credits: twenergy

You need to set your priorities right. And your priorities solely depend on the current conditions surrounding you.

Such as …

Your best friend is driving a car, you want to do the same!

It may be you want to impress that girlfriend of yours with beautiful Jewelry, nice clothes.

Whatsoever the reasons are, our perceptions and needs vary with age, peer group motive and notion.  

You just can’t compare the thinking faculty of a 20 years old with a 50 years old.

Set the purpose for investing. 

It's maybe because you need to travel the world, build a nice house, live comfortably with your family or even get married.

 Define the purpose of investing and stick with it to the end.

Understanding the Risk Involve in Investing

Before you put your money where your mouth is, understand the risk level. 

The investment plan may be tempting, seducing and enticing you to put in your hard earned cash, but if it fails, can you live with that?

For every investment, there should be a level of tolerance, a level of acceptable losses, the investor is willing to take.

Once you have understood that, you can invest your money into any business to make profits. 

After all, investment is all about making profits.

When deciding to invest in any business, the amount you are investing should be directly proportional to the risk you are willing to accept.

Discovering How to Invest Your Money

Discovering how to invest is fused on understanding the risk involved. 

There is a business that is volatile and there are those business that are not.

To invest is to key into the understanding of long term investment and short term investment. 

Long term investments are mostly Real Estate and land acquisition in this part of the world.

But for short term investment, like the transport business, the cost of acquiring a suitable bus for transport is high, and have a high risk of accident while travelling.

Therefore, it is important to pay attention to the calculated amount of returns per week and also the risk involved in business, in this case buses. 

We need to consider vehicle maintenance, customer complaints and risk of getting sick all the time.

Once these feats are considered and weighed, then you have discovered how to invest your money wisely to get the returns you need at the end of the week or month. 

And that is what is called a successful investment as it lies between acceptable risks.

Deciding a Broker or a Financial Advisor

This is Nigeria, deciding a broker or financial advisor is important. 

Unfortunately, we are short-handed on this aspect, because there are no trusted brokers or financial advisors in Nigeria.

Most of them are just there to make a living of your profits and also your capital. 

Therefore, when deciding a broker or a financial advisor for investment. 

Please, he/she should be choosing based on merits, reputation, performance, recommendation and the ability to explain, interpret, educate and shad light on grey areas of any investment you wish to embark, especially in Nigeria.

If you are interested in investing in Nigeria, please ensure you consult a lawyer that specialized in investment or monetary laws in Nigeria before you invest in any business no matter the payment proof, expertise tendered to you by the broker or financial advisor!

Wait For Your Investment to Mature

You see, an average human being would want to invest today and reap the fruits of his investment tomorrow. 

For this reason, many people around the world have been scammed!

People are in hurry to become rich and famous without putting the man hours in labour & patience.

Don’t let greed limit your income or increase the loss of your hard earned cash.

As a long-term investor in Real Estate, Agriculture or Ankara manufacturing industry, you need to wait for the investment to mature before reaping the dividend of your investment.

Stop panicking and having sleepless nights. Any investment that you from night sleep must be changed or rather be subjected to review in order to have a good night sleep.

You Should Diversify Your Investment

To achieve financial success is to diversify your investment. 

Take Aliko Dangote  for example. He is into diverse economy in Nigeria as a businessman.

He is into Sugar production and distribution, Rice production and distribution, you name it, Dangote is into it in Nigeria.

This is what is meant by the term investment diversification,  Invest in many companies, in many products and services in order to reduce the risks associated with a single investment plan in the country.

Whenever you invest in only one company, when that company crashes/liquidate, you lose all your savings. 

There is no way if you have invested in five companies, all five will crumble in a single day or time.

Thus, diversification is as important as the investment.

Buying and Selling of Goods & Services

I respect the economy of Nigeria at the grassroots. 

The grassroots buying and selling is more complex and straight forward than the standardized business strategies we have in the country.

You need to buy a product cheap and sell it expensive. 

The phone market in Nigeria is the best booming market for almost 70% of Nigerians in the grassroots.

                                                 image credits: AbsolutVision via Pixabay

For example

A phone bought today in the store for $200 (around N66,000) maybe be sold after a week of use at $205 (around N68,000) in the streets of Nigeria. 

Sometimes it falls woefully from $200 to $120 in just a day.

To invest is to learn how to buy something cheap and sell it expensive to others in the world or in your country.

These principles help in increasing the amount of money that can be used for investment. 

Try understanding it and applying it to your financial life to uplift your investment ideas and make more money.

It does not have to be with phones alone, you can also apply this principle in the Acquisition of land property in Nigeria or other parts of the world.

Last on the list

Invest in What You Know

The first rule of investment is to invest in a business you know very well! 

I always want to invest in blogging, because I know how to blog, I can’t be lured into investing in Oil & Gas or in Agriculture which I do not know.

Generally speaking, to invest in what you know is to invest in what you know how the market fluctuates. 

This will surely become beneficial for you based on knowledge and perceptions of profits and loss.

This can also help you in acquiring the correct information, perceptions and factually evidence of the possible outcome in the balance sheet of your investment.

Finally

Before you venture into any business, it does not hurt to have a little knowledge about the business. 

Before you invest, it does not hurt to have little knowledge of the investment.