- Stock Investing is all about risks.
Lately, you’ve been seeing this question around: Would you rather take a guaranteed N100, 000.00 or a 50/50 chance at N1, 000,000.00? That question typically explains an important concept in investing. Stock investing refers to taking a chance, while bond investing refers to the guaranteed option. Stock investing is risk-engaging. Yes, it’s not always gains on this side of investing. You can lose just as much as you make. So, if you think you will be needing that money for something really important in a couple of months, avoid risking it. In other news, avoid stocks investing…
“If you have trouble in imagining a 20% loss in the stock market, you shouldn’t be in stocks” – Jack Bogle
- Patience: An investor’s virtue.
Investing in shares should not be compared to gambling, it takes a much longer time to payoff. If you desire excitement, avoid investing. We should avoid the chase for quick returns. The stock market is not a wonder bank. “Only buy something that you will be perfectly happy to hold if the market shut down for ten years” – Warren Buffet
- Investing requires education/knowledge.
Behind every stock purchased, there is a company. How much of this company do you know? How much of its operations are you familiar with? What are you trading on when you commit your funds into the stock market? Investment Securities? Yes, you are partly correct, but the underlying trade item is INFORMATION. Be fair to yourself, you shouldn’t put your money out there and go to sleep. Getting up-to-date market news is very essential and providing you with such information is our brand mantra at Meristem Stockbrokers Limited (www.meritrade.com). Education and knowledge are probably the most important tools for investing. They enable us make informed decisions. ”An investment in knowledge pays the best interest.” – Benjamin Franklin
- Investments require professional guidance. Seek expert advice.
You cannot know it all. So, you are a successful surgeon, or a professor of law or you are well grounded in matters of the polity. You will always earn that respect in your field, given that you’ve worked hard to get there. Just because you are that good in your field, doesn’t mean you are good enough to make decisions with regards to investments. Yes, you are smart but please don’t attempt to think you are smart enough to make investment decisions. Education and financial sophistication are not the same thing. You should always consult an investment expert that understands your needs for guidance on how to navigate the stormy waters of the investment world. Our team of professionals at Meristem Stockbrokers Limited (www.meritrade.com) are well equipped to provide you with the required support. As investors, “we shouldn’t be penny wise, pound foolish”.
- Investing should be goal based.
Why embark on a trip without a purpose. Similarly, before embarking on an investment journey, ask yourself this question. What am I investing for? Really, what are you sacrificing today’s spending for? This is a very serious question, many investors fail to reckon with. In investments (and in life generally) clarity of purpose wards off distractions and helps you focus on your investment goal. Such attitude not only helps you manage your investments to achieve your set goal, it also guides you to know if you can spend more than you think today.
- It is always about the future. Successful Investment comes with discipline and planning.
Let’s assume you have identified a goal for investing. Achieving that investment goal truly lies with planning and being disciplined. Discipline requires that you quit the chase to “keep up with the Joneses”. The choice will always be yours to make. To liquidate your investments midway for an expensive vacation with friends or wait a little longer to accumulate enough money that can afford you that dream house? To “chop” your life now or constantly put aside a little to prepare for your retirement? Obviously, when faced with such choices, it will always make sense to have our eyes on the prize (our investment goal). Please don’t think otherwise.
Successful investments is not usually about being smart. “We don’t have to be smarter than the rest. We have to be more disciplined than the rest.”– Warren Buffet
- Embrace technological innovations. They are here to stay.
Open your eyes, everything is going digital. Don’t get stuck with the overbearing paperwork procedures of investing. There are many online stock trading platform solutions, such as the Meritrade platform (www.meritrade.com) , that are developed to help us make life a lot easier and get things done faster too.
- The past is an essential story. It won’t necessarily repeat itself.
Remember, that 2007-08 market crash? Yes, it was a big disaster and we probably don’t want to tow that line again, especially when you recollect the significantly negative impact it had on a relative’s investments. The bitter truth is, irrespective of what happened, the market remains and it won’t always be fair. Dear investor, don’t forget the past, rather remember to learn from the past. The past is not sure to repeat itself in the future but “those who do not learn history, are doomed to repeat it”. Be guided!
- The size of your financial assets don’t matter. You can start with what you have now.
Another interesting question potential investors ask is “how much do I need to have in place before I can start investing”? Well, today’s wealthy investor had to start from somewhere and probably didn’t have as much as you own currently. So, feel free to start with what you refer to as “little”. There is always a product, such as Meristem Wealth Mutual Fund ( www.meristemwealth.com) , that caters to such asset size for investment purposes.
- When is the best time to start investing?
Many investors aren’t sure about the best time to enter into the market. Well, here’s a teaser to guide you. Recall that Chinese proverb, “The best time to plant a tree was 20 years ago, the second best time is NOW.” It applies to our investment culture too. If you want to invest, there will not be a better time than NOW to start investing. Benefits of investing are more appreciated over a longer time period as your investments will have sufficient time to grow. It’s not about timing the market, it’s more of time in the market.