You have heard and read so much about investing your income and just when you feel you are ready, that nagging concern crops up “How much do I need to start investing?”
According to Aleks Todorova, a personal finance expert, “Nowhere is cash more controversial than in investing, where having “too much” of it is considered a risk.” The bottom line, you don’t need a huge amount of money to start making investments.
Good thing is, we live in a country where there are thousands of businesses looking for funds from individuals, groups and organizations. As an individual hoping to increase your income in the long term, what should be at the back of your mind is there are no set guidelines around exactly the amount you need to start.
For instance, to buy shares in any of the companies listed on the Nigerian Stock Exchange, you might find different price ranges. There are some you may need to put in as little as N1, 000 minimum. Nancy Gondo a stock expert says “What’s more important than how much you have to invest is learning how to pick the best stocks. Stocks have the potential for big gains if you know which ones to pick at the right time. There are two components to the right time: the stock itself and the overall market.”
Similarly, you may want to partner with someone to start a side business that will supplement your income. The amount you may need to invest will vary according to the type of business.
The most important thing is to make up your mind you have to invest. What are the signs that you are ready to invest? I) Earning more money than you are spending 2) Spare cash that you do not need for a while 3) You have a budget that shows how much you could regularly contribute 4) You are aware of the risk involved in investment and 5) you have minimal debt.
We usually recommend that a small beginning is better than a big bang announcement– particularly if you are within the low income bracket, that way if anything happens you are able to take it. Whether you are buying shares, investing in a managed fund like a thrift collection, putting extra into your retirement fund or opening a savings account or a term deposit, regularly contributing small amount will gradually make a huge difference.
Second, get a good advice before you invest. Education, according to an expert, might be the most important factor in early investing success. Like most beginning investors, you may not know where to look for quality, unbiased investing guidance. You can start your investigation online; a platform called online brokerage provides quality free education to beginners. Talk to a good stock broker from a reputable brokerage.
Finally, do not just invest for the sake of it, have a plan. Having an investing plan will help you determine your investing goal. For instance, are you investing for retirement, buy a house, pay for your children’s college or pay for a property? Make your plan personal and tailor it to the amount of time you need to reach your goals and your risk tolerance.
FRANK ELEANYA
