Investing is one of the most important aspects of finance. When you invest, your money compounds and grows.
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Investing is the act of allocating resources, usually money with the expectation of generating an income or profit.
Regardless of where you invest your money, you are essentially giving your money to a company or other entity hoping to get more money in the future.
Investing is different from saving, investing is riskier than saving money. Saving is sometimes guaranteed but investments are not. If you were to keep your money in a box and not invest, you won’t have more money than what you have put away yourself.
But if you were to put your money in any investment, you would have more money than what you actually invested. That’s why so many people choose to invest their money.
How you invest depends on what exactly you are investing for. People invest money with a specific goal in mind, for example, retirement, children’s education and so on.
There are things to put into consideration before investing:
Before venturing into any investment, there are some important questions you should ask yourself. You can’t rush off and start investing, there are things you need to be clear about. These questions will determine whether you are in a good financial shape to start investing;
- Do you have a lot of debt?
If the answer is yes, investing may not be the smartest move yet. First, you will need to clear that debt. Excessive debt accumulation affects investment plans.
- Do you have an emergency fund?
Life is full of ups and downs. There are times when we face some pressing issues, such as sickness, natural disasters and so on. In order to avoid total ruin, you should set aside some money for emergencies. The fund can be used to cover unforeseen expenses without having to take out a loan.
Basics of investing
- Have a goal or plan: Know what your goals are and invest appropriately. Do not buy an investment simply because someone tells you to buy the investment, even if it’s a professional. Do your own research, find out what is out there. Make an investing plan and stick to it. With your goal and tolerance in mind, you can get started.
- Time Horizon: The length of time you will hold a particular investment. You need to know the time horizon of what you are investing for. Short term horizon, you should invest more conservatively while long time horizon can choose riskier investments. If your approach is intended to be a long term plan, making decisions based on short-term market fluctuations may greatly affect what you set out to achieve.
- Diversification: Diversifying your investment is an effective way of reducing investment risk. Every investment sector goes through tough times. Rather than putting all your money on some investment you think will perform well, diversify your investments. In doing this, if one of your investments doesn’t do well, you haven’t lost everything. Invest in many different industries and assets. Regardless how long you are investing for, diversifying your portfolio is an absolute must.
- Risk Tolerance: When starting out in investing, you will need to assess your personal risk tolerance. Do you have the ability and willingness to lose your money wherever you invest your money? Can you really afford to lose your investment? Risk tolerance is often dictated by the length of time you will hold a particular investment. Investing is much more suited to money you don’t need in the short term. You need to understand the risk.
Types of Investments we have includes;
- Real estate
Benefits of investing
- Grow your money: Investing your money allows you to grow it. It helps you create wealth and increase your financial worth. Gives you the opportunity to earn higher rates of return.
- Reach your financial goals: Investing your money helps you reach your big financial goals.
- Save for retirement: Putting your retirement savings into a portfolio of investment, such as Stocks, Cryptocurrency, Real estate; then at retirement age, you can live off money earned from these investments.
Investing your money is one of the most effective ways to build long-term wealth.
Don’t stop investing because of bad performance. Many investors tend to buy things that have appreciated in value and sell things that have declined in value. Rather than do this, you should create a plan you think will help you reach your goals over the time period you have to invest and stick to the plan.
There is potential you would lose your money in investments, but if you invest wisely, the potential to make profit will be higher than your losses. Set aside some funds and start investing for your future. If you haven’t begun investing yet, you should immediately start creating a plan.