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But investing—which is simply about growing your wealth –should not be hard. Here are the steps you can take to succeed on this front:
Step 1: Learn the Basics
“Investing” is a broad and deep subject; there’s no end to learning about it, even for professionals who have been at it for decades. But that shouldn’t discourage you from commencing your investment journey. You will have to understand the foundational concepts: identifying opportunities, compounding, spreading risk, and so on. But if you’re keen on building wealth over the long term, you will pick up on these things fairly quickly. Speaking about the basics, you’ll soon realize that your study of investing introduces you to diverse fields. Economics and finance are the obvious ones. But as you explore investing in specific assets, you’ll have to become familiar with the domains in which they are relevant. Real estate, agriculture, tech, and energy are examples. There are a lot of resources on the web for anyone who wants to learn about investing: explainer videos, articles, courses, ebooks, and podcasts.Step 2: Choose One or a Few Asset Types
Your learning and investigations will lead to you settle for one or a few asset type(s) you’d want to invest in. That decision is ideally dependent on your budget, investment goals, and risk appetite. Whatever you decide on, you should begin with one or a few assets. This will allow you to learn the ropes with a less complex portfolio and a small number of scenarios to worry about. As your wealth grows, you may diversify your investments. The smaller your budget, the fewer opportunities you can invest in. However, digital technology has enabled Nigerians to commit small amounts of money to investments in traditionally capital-intensive fields. We’ll talk about them later in this article. One thing you’ll need to ascertain is your risk appetite concerning investing. If you’re risk averse, you may go for options that have limited risk associated with them. Examples are government bonds, treasury bills, and high-yield savings accounts. High-risk investments are Initial Public Offerings (IPOs), Venture Capital, and the global currencies trade. Note that lower-risk investments tend to yield lower returns (in percentage terms) than higher-risk ones.Sign up for the Connect Nigeria daily newsletter
Step 3: Choose a Platform
This doesn’t necessarily apply to investments like real estate, over which you have more direct control. It’s a step you should take if you’ve opted to invest in stocks or bonds, for instance. Thankfully, there are a number of these platforms in Nigeria from which you can choose. If you’d like to buy stock, you can use bamboo, chaka, or Trove. These apps give you access to the Nigerian and international capital markets and allow you to begin investing with limited funds. There’s the alternative of doing things the old-fashioned way: engaging a stock broker who will help with purchasing and maintaining your stock holdings. You may also acquire government bonds through traditional financial institutions. In addition to this, there are a few platforms that allow you to invest in real estate without buying or building a full property yourself. But if you’re making a substantial investment, you’ll have to work with a developer and monitor physical sites until construction is completed; or you could buy existing property directly from its current owner.Step 4: Invest
We assume that, by this stage, you’ve already decided on a sum to commit to your initial investment. Having reviewed the various vehicles and platforms you’re interested in, you may go on to register with one that ticks the most boxes for you. After that, you’ll be able to invest in that app or website. As we suggested earlier, it’s a good idea to start small and with one or a few types of opportunities. So, you could begin with real estate alone; or make your first move with corporate bonds. Just make sure you understand whatever you’re investing in before funnelling funds into it.Step 5: Watch Returns Roll in
Watching your investments generate returns tends to be quite a satisfying experience. This is true whether it’s stocks paying a dividend or your property delivering rental income. This is what it means for your money to work for you. Bear in mind that your investment portfolio will produce the best results if you periodically adjust its composition for optimal performance. The longer you stay invested, the more your interest payments will compound and your wealth multiply. To make the most of compounding, consider channelling a portion of your income to existing or new investments, regularly (say, monthly).Register to attend the CN Business Mixer
Final Words
We’ve shown you how to make your money work for you. Now it’s up to you to power up your wealth-building engine. The good news is, you can probably kick things off with what you have.Got a suggestion? Contact us: editor@connectnigeria.com
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