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 HOW TO PICK GOOD INVESTMENTS IN TODAY’S ECONOMY

HOW TO PICK GOOD INVESTMENTS IN TODAY’S ECONOMY

The word “investment” may conjure images of the fierce Nigerian Stock Exchange, or you probably think it’s only meant for those wealthier, older or more advanced in their careers than you. But this couldn’t be further from the truth.

When properly understood, investing is the best way to grow your money, and most types of investments are accessible to virtually anyone regardless of age, income or career. Such factors will, however, influence which investments are best for you at this particular moment.

For example, someone who just got started on a job with no savings to speak of may want to consider a very different investment plan from a veteran who is about to retire.

Truth is that, none of these individuals should say no to investment opportunities. They just need to learn how to choose an investment or hire someone to handle it for them.  

Here are 6 things to consider when choosing an investment, especially in a recessive economy. These tips are not to be taken as investment advice, but as a guide that can help you avoid mistakes and fraudulent schemes that are masked as investments.  

Invest small rather than not investing at all.

Just as it is better to take action rather than total negligence, starting your investment journey with a small amount can bring long-term rewards than not doing it at all. However, there are two challenges to investing small amounts of money. The good news? They’re both easily conquered.

The first challenge is that many investments require a minimum start-up amount. The second is that it’s hard to diversify small amounts of money. Diversification, by nature, involves spreading your money around. The less money you have, the harder it is to spread. Investing is a long-term game, so you shouldn’t invest money you might need in the short term. That includes a cash cushion for emergencies. In whatever financial situation you are, just put some amounts aside for investment.

Don’t take too much risk.

If there’s any rule of investment you should never forget, it is this: “Never expose your money to more risk than is absolutely necessary to accomplish your goals.” While investing in a diversified stock fund helps cut risk, everyone’s risk tolerance and financial goals are different.

I like to think about investing as a scale that goes from extremely conservative to extremely risky. Conservative investment doesn’t earn much, but your money is completely safe.

However, stocks are on the risky end of the scale. And the middle includes investments such as bonds, which are loans made by an investor to a borrower.

The mix of stocks, bonds, cash, and other assets you may choose is known as asset allocation and it’s a powerful factor in your investment returns.

How you divide your money among asset classes should depend on your risk tolerance and when you expect to spend the invested money.

To protect yourself from unnecessary risk, you might consider investing your funds with an established fund manager. Some of them pay from 3 to 5% ROI, which is far better than saving that money.

Most of these companies are highly diversified, one-size-fits-all solutions and low risk, so you can become less aggressive as you approach your investment with them.

Apply the magic of compounding

Compounding your investment simply means leaving your investment untouched for several years to get high capital appreciation.

There is so much power in compounding that when you start earning money on the money your investments have already earned, you’re experiencing exponential or compound growth. This is one of the ways the rich are getting richer. They invest in the long term by forgetting about the investment for a long time till it yields massive returns.

This is why people who start the investing game earlier in life can vastly outperform late starters. They get the benefit of compounding growth over a longer period of time. So, if you ever want to be an investor, my advice for you is to get into the game early.

Diversify your portfolio:

A great part of your investment decision is to know what you want your portfolio to achieve, and stick with it. Most experts begin with one or two portfolio and focus on building it till they get reasonable ROI, then they diversify. Diversification is an investment strategy that means owning a mix of investments within and across asset classes. The primary goal of diversification is to reduce a portfolio’s exposure to risk and volatility. It is one of the ways experts use in mitigating investment risk. Since it aims to smooth out investments’ swings, diversification minimizes losses but also limits gains. You may want to consider diversifying because You will earn more if you diversify your portfolio. A blended approach to investment works better.

How Good is the dividend/ROI?

Dividends are a powerful way to boost your earnings. The frequency and amount of the returns are subject to the company’s discretion and they are largely driven by the company’s financial performance. More established companies typically pay dividends.

Reinvested dividends and the power of compounding, are responsible for most wealthy portfolio.

In making your investment decision, you may want to consider a company that is consistent with paying dividends, and especially the frequency of payment.

Pick an industry that interests you, and explore the news and trends that drive it from day to day.

This will help you balance pursuit with passion. Learning about the companies, trends and the day-to-day happenings of the industry and companies will be easier because of the interest you already have in that industry. This will in turn help you make help smart investment decisions.

Don’t be afraid to ask for investment help from Industry Leaders.

You will always want to ask for help to get cleared on every grey area before putting your money down. This has a lot to do with where you are investing and who is guiding you or managing your portfolio. Talking about where to invest, it really comes down to two things: the time horizon for your goals, and how much risk you’re willing to take. For instance, if you’re investing for a long-term goal, like retirement, you should be invested primarily in stocks. Investing in stocks will allow your money to grow and outpace inflation over time. As your goal gets closer, you can slowly start to dial back your stock allocation and add in more bonds, which are generally safer investments. On the other hand, if you’re investing for a short-term goal — less than five years — you likely don’t want to be invested in stocks at all. Consider Short term investments such as the one offered by Stainerz Prime Fund, our financial services arm.

Stainerz Prime Fund offers investors 3% to 4% of invested fund after a preferred investment period. Minimum Amount is Five Hundred Thousand Naira (N500,000) and maximum is One Hundred Milliona Naira (N100,000,000). Minimum period is six (6) months. The fund is injected into any or all of our subsidiaries that are performing viably with guaranteed returns for investors.

We also run an inhouse Investment Advisory Council that can guide you on making any investment decisions.

You may contact us via 09090690690

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