In the twenties, Ben Graham was a well-known investor who had a dynamic approach to investing. He would search for inexpensive stocks; carefully study the balance sheet and income statement of the companies, making sure there were no risks before making the buying decision. The secret of his investing, he revealed in his books, Security Analysis and Intelligent Investor, which is perhaps the greatest book ever written on investment strategy.
Warren Buffet read, studied and worked for Ben Graham, but he has a different approach to investing. Instead of picking companies with inexpensive stocks, he prefers to study the company’s management and corporate governance and that was how he successfully rose from being the stockbroker who lived in sixty-five dollars a month-mice-infested-apartment, to becoming one of the world’s richest men.
When it comes to investing, most people see it like a nightmare, most especially when it comes to investing in stocks. Every other investment platform is also volatile and that is why you must invest wisely. Below are the points you must note before investing your hard earned money:
First, it is important that you plan how much you intend to invest at a particular point in time. Regardless of how juicy the investment package may be, the most important thing is to plan the amount you intend to invest. I always advise that you should keep an investment account, which is a personal account that 10 to 20 percent of your monthly income or salary goes into for investment purpose. From this account, you can decide on the specific amount you want to invest in a particular investment portfolio and discipline yourself not to exceed that budget.
Secondly, seek investment advice. The mistake most people make is investing in what they barely have any knowledge about how it works. This is perhaps the fastest way to lose your money. Before you begin your investment journey, find a very good investment consultant that can advise you as regarding the different types of opportunities that is available to you and your money. However, the job of the consultant is not to tell you which investing vehicle is spitting money, but to guide your investment plan and decision. Like I always say to my clients, every investment platform has the tendency to spit money as long as you understand how it works.
Thirdly, you must see your money as an employee. Every employee has what we call job designation, description or responsibility. A decent employee fits into his or her job description and produces result or income for whatever organisation he or she represents. In like manner, you must see every single naira as a potential employee that must earn more naira for you, if you protect them and put them to work. So, carefully select the direction you are sending your money, making sure you thoroughly understand how it works and how to manage it properly until it yields returns.
Fourthly, carefully select a particular platform to begin your investment journey. Although your financial plan may include diversification, start with a platform. There is nothing wrong with diversifying, but it is not a good idea for a beginner who is learning to make his or her money work for him or her. Concentrate your energy on a particular platform, making sure you understand it very well, and become an expert in it before you move on to another platform.
Lastly, employ the acronyms of the word “FOCUS”. It simply means- Follow a Course until Successful. When it comes to investment, it is like riding a bicycle; your learning skill gets stronger and better each time you fall and rise again. When it comes to investment, the fact that you lose some money does not make the investment platform you employed less profitable or too volatile, you will simply need to learn and understand what went wrong and then continue investing until your investment starts yielding returns. Every successful investor has lost money more than once before they became expert and learnt how to make money instead of losing it. I am not saying you should invest to lose, but you need to understand that losing and winning is part of the game, when it comes to investing.
