For many people, the concept of ‘investment plan’ is images of men in black and grey suits, monitoring the Nigerian Stock Exchange (NSE) indexes, and exchanging millions of dollars Over The Counter (OTC). What they don’t know is, anybody can be an investor, as long as you have an investment plan.
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The truth is, you don’t need to be an investment banker or a broker to start investing. It’s okay if all you have is a short or a sweatshirt because you don’t need to have a black or a grey suit.
More so, even if you only have a few dollars to your name, the right investment with a solid investment plan will always compound and catalyze your financial growth.
Imagine you have an old friend to visit, but you don’t have an idea where he/she lives. You don’t just get into your car and start driving, hoping you’ll find the old friend without having a roadmap or an address to map your route down to the old friend.
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What Is An Investment Plan?
An investment plan is a roadmap that leads you to your financial El Dorado. It will help you have a laser-sharp focus on the route that will lead you to your destination. Similar to embarking on a journey, an investment plan doesn’t have to be complicated, neither does it require you to hire the services of a broker. It is simple, apt, and doesn’t require much time if done properly.
You don’t get rich by accidents or through a get rich quick scheme; you get rich through a solid investment plan. According to lottery USA, 1 out of 14 million people is likely to win a huge lottery – less than 0.0000001%. Apparently, this means that you are more likely to be hit by a part of a plane falling from the sky (1 in 10,000,000) than securing a life-changing jackpot.
Irrespective of your age, profession, social status, tax bracket, there is always a space for you in the classrooms of investors. All you just need to get right is your investment plan. Moreover, there are so many different options, investing for beginners is simpler and more straightforward than ever before, especially in the FinTech space.
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Growing your money can be very addictive. Here are five simple ways to start your investment plan:
Five Simple Ways To Start Your Investment Plan
1.) Start With Your ‘Why?’
Set your investment goals. Why do you want to invest? Be as specific as possible, make sure it ignites a burning desire in you towards investment. Investments must be chosen with an eye on the ’why?’
Is it for safety, income, or growth? Knowing your ‘why?’ helps you understand the right type of investment to explore. You need to decide which of these three characteristics; safety, income, or growth is the most important to you.
Do you need a reliable income to live on in your retirement years? Do you need to grow your portfolio so that your investment will provide a good income later in the future? Or, you want to hedge funds to safety (preserving your principal value)? Which of the reasons is top priority for you? When you have a clear ‘why’, you’ll know the short, mid, or long-term investment strategy that’s best for you.
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2.) Save And Put Aside Some Money For Investment.
The key to building wealth is developing good habits, like regularly putting money away every month. Swap and convert the gala and lacesera budget in traffic to your savings a month. You’d be surprised at how much you would realize. Once you start having some loose cash to play with, you can start to invest.
Some investment portfolios require that you have minimum investment amounts. So, before you can layout a solid investment plan, you have to determine how much you can invest. Do you have a lump sum, or are you able to make regular monthly contributions? Do you save? If you have a larger sum to invest, obviously more options are available to you. In that case, you’ll want to use a variety of investment options, so you can minimize the impact and risk of one investment going south.
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3.) What Is Your Risk Appetite?
The general approach to investments and risks is that;
High Risk = High Return (Aggressive Investors)
Low Risk = Low Return (Conservative Investors)
The need to understand your risk appetite as an investor is paramount. Are you a conservative investor? Conservative investors prioritize the preservation of capital over market returns. They seek to protect an investment portfolio’s value by investing in lower-risk securities such as fixed-income and money market securities, and often blue-chip or large-cap equities.
However, one easy way to reduce investment risk is to diversify. By doing so, you may still experience some uncertainties in investment value. But, you will reduce the risk of a complete loss due to bad timing or other unfortunate circumstances.
Note that, high returns, low risk hardly ever exist in solid investment portfolios. Let your approach be moderate and consider starting conservatively so you understand investment properly, and not get your fingers burnt.
4.) What To Do With Your Return On Investment
One key investment plan that a lot of people leave out of the picture, is what to do with the returns. As an entrepreneur, you want to know how you’re going to divide up your returns on your Return On Investment (ROI).
There is power in compounding; that is reinvesting your returns to generate more value on your investment. However, if you don’t want to reinvest, you’ll need to consider which account your returns are going into and how you’re going to divide that up between the many accounts that you may have.
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5.) What Should You Invest In?
After all said and done. An entrepreneur needs to pay attention to the ‘what?’
Layout a thorough list of all the choices that are in sync with your ‘why’. Also, weigh the pros and cons of each investment option. Next, narrow your final investment choices down to what you understand and what you feel comfortable about.
Some investments are great for the long-term, while others are for the short-term. You can start with the stock market, treasury bill, or maybe bonds.
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There are plenty of ways to start investing that little money. More so, the advent of technology and the tremendous growth in the African financial tech space is making investing a lot easier now. There are many apps and platforms that can help you invest. So, you’ve got no excuse for not having an investment plan.
Do you have an investment plan? What is your risk appetite and what instrument have you been investing prior to this article? Please share your experience in the comment section. And please share this content with your audience if you found it useful.
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