Having a purpose enables you to make intelligent investments.
An investment is understood as an asset or item purchased with the aim of creating income or appreciation. In an economic term, an investment is the acquisition of goods for future purposes in order to create wealth. Also, in finance, investments are seen as a monetary asset acquired with the conception that it will yield profit in the future or be sold at a higher price for a profit.
In as much as investing your funds is a good financial decision, however, it should be done wisely. Before you entrust your money to any stockbroking firm, you need to ask yourself these questions: what kind of investor am I? Am I an active investor or a passive investor? It is also advisable to have a good knowledge of where you are putting your funds and learn how to manage your account.
Having a Fund Manager can be a good consideration. The person’s role is to guide you through and help you manage your portfolio. But if you feel you have good knowledge of investment, you can opt to handle your account by yourself, as this will enable you to track the growth of your money. Some Broking firms in Nigeria like Meristem Registrars Limited, GTI Capital Limited, Sigma Securities Limited & Action Alliance Stockbrokers allow you to invest in stocks, bonds, exchange-traded funds (ETFs), index funds, and mutual funds.
However, if you are going to invest in the stock and bond markets, it’s imperative to play the long game. In other to avert shooting yourself on the foot. This is because Investments held for longer periods tend to exhibit lower volatility than those held for shorter periods.
Below are the 8 Timeless Investing tips to aid you make Intelligent Investment
1. UNDERSTAND WHY YOU WANT INVEST
To be productive in anything, you need to have a clear understanding/knowledge of what you are venturing into and why you want to venture into it. Going into investment you must know your main purpose, as it will enable you make intelligent investment.
Some people go into investment because everyone is debating about investment and how good your RIO (Return on Investment) could be. Without a clear objective, they blindly invest their funds, thereby putting themselves on panic when the market goes south.
For you to have a clear understanding why you want to invest you need to be able to answer some of the salient question like: Why do you want to invest? Is it to save for retirement, buy a house and fund your education?
Investing without a goal and knowledge makes it hard to stay motivated. When there is inflation, you may panic and sell to avoid losing money. Have it in mind that if you sell when your investments dropped, you will lose money. If your investments are tied to a long-term goal, it will be very difficult for you to lose your money.
2. GET HELP OR DIY
Even after reading a few articles and watching some of the stock & analysis updates online about the best investing tips for new investors, you may not be comfortable or confident to do this kind of planning and investment on your own. This is where practicing with a demo comes in. There are some online stock broking platforms that offers free online trading demo to enable you learn how to trade without funding the account. Also, there are plenty of resources available to teach you about investing. If you want to be a DIY investor, be an educated and intelligent one.
Meristem Securities Limited has a stocks investment/trading demo platform called MeriGame that enables one to learn the ropes before they enter the live market. The whole idea of using a demo is to enable one to learn and practice stocks investment without losing their hard-earned money.
Asides making use of demo other ways you can learn on how to invest is by getting help from a financial advisory. The person will help put you through and guide you on how to invest your money.
3. CHOOSE LONG TERM INVESTMENT
You should not invest in the capital markets such as stocks, bonds, mutual funds, etc. unless you have a long-term goal like retirement or saving for your education and that of your kids.
If you are investing in stocks, you should have a 15-year scope or longer to allow your fund to mature. Stocks are volatile, which means they go up and down rather quickly.
That makes stocks riskier investments. If you want to get a higher return, you must take on more investment risk. The longer you hold the investments, the less risky they are. But the ride will not be a smooth one. History tells us if you stick with it and stay consistent, you will likely do well. Ten years is the minimum, but the longer, the better.
4. KNOW YOUR OPTIONS
For most people, Mutual funds or ETFs are the best options. Both offer a way to invest in many securities such as stocks and bonds. That helps diversify your investments, which can reduce investment risk and offer the chance to have investments in almost any market around the globe. Here is a partial list to consider. Individual stocks, Individual bonds, Mutual funds, Exchange-traded funds (ETFs) and Private equity. Individual stocks are one of the riskiest investments. Most people would do well to avoid them.
5. MONITOR YOUR PROGRESS
Looking at investment returns is important only as it relates to getting the return necessary to achieve your goals. If you’re investing in low-cost index funds, you’re getting market returns minus costs. You won’t need to switch to a “better” fund to increase returns.
Rebalancing once a year keeps the portfolio in line with your investment goals. Rebalancing means selling those funds that have increased higher than the amount your plan says you should have in them. With the proceeds of those sales, you invest in other funds that have fallen below the recommended levels.
It’s one way to take advantage of buying low and selling high. Rebalancing helps manage investment risk and keep the portfolio invested the way your plan sets.
6. BE FLEXIBLE
Investment and financial planning are not onetime events. Life happens. Health issues, divorce, and job changes may cause you to adjust your plans. Don’t panic and make drastic changes. An annual checkup offers the opportunity to make any changes necessary.
7. CONTINUE LEARNING
Whether you are a DIY investor or rely on an advisor, educating yourself about the markets, investing, and retirement planning will help you make better decisions.
There is no shortage of noise in the 24-hour news cycle of today. The noise comes from a lot of different places in a lot of different ways. Whether it’s cable news, financial media, investment companies, brokers, friends, or any other source, it’s hard to know what’s real. Learn as much as you can to shield your investments against bad information and decisions.
8. BE PATIENT
Investing is simple but not necessarily easy. It takes discipline to develop and stick with a plan. Knowing your goals and why you want to invest makes it much easier to stay the course.
Watching your portfolio every day, week, or month can cause anxiety and fear. Instead of tracking your investments so closely, map out your plan from the beginning and stay consistent. Educate yourself, stick to what you know, and remember that investing is a long-term game.
Ready to start investing today? Check out list of stock brokering firms in Nigeria to enable you choose the best stock broking firm.
This book Rich Dad & Poor Dad below also offers perfect guide for beginner investors.
- http://www.olafusimichael.com/2017/09/meristem-stocks-demo- trading-platform.html