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Lesson 3: Welcome To The World Of Investing

Let’s Discuss Investments!

Investing is when you put aside money into funds or activities that will earn you returns or profit. Simply said; making your money work for you. Investment is totally different from savings in the sense that your savings is usually short term and should be for specific goals. Investment on the other hand is long term and returns better interest than the regular savings. You are simply taking care of your future when you invest.

Investing in assets like shares, bonds, retirement funds, properties and more can increase your net worth exponentially.

Every Investment comes with risk and while some are low-risk, some are high-risk. However , the lower the risk, the lower the returns and the higher the risk, the higher the returns.

Before we go deep into Investments, let’s talk about your Networth.

Simply said: Networth is Assets (WHAT YOU OWN) Minus Liabilities (WHAT YOU OWE). Someone said “Your Networth is a one number snapshot of your financial health and the types of shocks you can endure”

Your assets (land, property, stocks, bank accounts etc) versus liabilities ( loan, mortgage etc).. Investments form a major part of your Assets and it has a huge tendency to grow if you are deliberate about it!

Investing in assets like shares, bonds, retirement funds, properties and more can increase your net worth exponentially.

Every Investment comes with risk and while some are low-risk, some are high-risk. However , the lower the risk, the lower the returns and the higher the risk, the higher the returns.

We will explore the various classes in subsequent videos, but see a few notes below.

What Are The Asset classes You can Invest in?

1. Mutual Funds

By putting your money together with a pool of other investors and being managed by dedicated fund managers, you get a relatively good return on it). As i write this, mutual funds return about 14-15% per annum and there are variants of it. Money Market, Guaranteed Funds; depending on the Fund manager you are using. I am subscribed to the Stanbic IBTC Mutual Funds

The good things is that you can monitor your investments online and watch it grow.

2. Shares:
If you are risk averse, this is probably not for you, but if you have a good stockbroker, you could make some decent returns trading in shares. But since we are talking about investments, you can seek out good companies who have had a track record of profitability ans stabilize and invest in their shares. Some Mutual Funds invest in shares too; but in that case, you don’t have control over the shares they invest in. email me and we can discuss a few options. INVESTMENT-ONE also has a stockbroking arm.

3. Real Estate:
Properties are usually a fantastic form of Investments ; Land, landed property as they have the capacity to appreciate. Ensure you do it through the right means and you seek professional advice before committing your money.

4. Your Retirement Funds

I hope you are signed up for a pension account or retirement fund. They are one of the best investments you can have for the future. Please ensure your organisation makes the appropriate contributions for you alongside what you contribute yourself. If you live in the UK, I might have some information that will help you maximize your retirement contributions.

In all, I think Nigeria’s interest rates is one of the most appealing around the world; arguably so and so you see a lot of foreigners taking advantage of the opportunity by investing in some of the products the various investment companies offer.

I have written a blog article on what you can do with various funds , please read it HERE

In all, gaining knowledge about investing and increasing your net worth is fantastic, but taking action is what’s going to ultimately lead to you building wealth! You have to take action!

 

The higher the return, the higher the risks!

People have different risk profiles and that determines what they put their money in.

 

Do you know your risk temperament?