June 20, 2022

Investopedia defines Investment as “an asset or item acquired with the goal of generating income or appreciation”. It further goes on to state that “an investment always concerns the outlay of some capital today—time, effort, money, or an asset—in hopes of a greater payoff in the future than what was originally put in”.

In recent times, investing has become more difficult for people for multiple reasons ranging from loss of funds to various technicalities around the entire process. While investing should be fun, lack of prerequisite knowledge has made it a bit more difficult for people who are not traditional investors. This has led many people to the den of Ponzi scheme operators posing as investors. There are three key principles that should guide any investor:


1) Have a plan for your investment journey (“An investor without investment objectives is like a traveler without a destination.” Anonymous)

A lot of people are never prepared for their investment journey. They are usually spurred on to start investing after listening to someone talk about it or after watching some fancy shows on investment. When they start, they are usually quick to derail as they were never prepared for the journey. As fanciful as investment may sound, it comes with loads of spirited commitment and discipline. An investor must carefully plan their investment journey to accommodate their finance, long term as well as short term goals. The success of every investment cycle is dependent on how well the investor has stayed to the plan.


2) Understand what you are investing in. (“An investment in knowledge pays the best interest.” Benjamin Franklin)

More often than note, newbie investors loose lots of money because they clearly do not understand the mechanics and the dynamics of what they are investing in. The foundation to becoming a pro investor is to first bridge the knowledge gap in whatever space you want to invest in. As little as clearly understanding the different seasons and gestation period for agro-investors, to stocks historical performance vis-à-vis company’s performance for investors in stocks market to other macro and micro economic news. How well you know about the sector determines how well you can mitigate your risk and ensure profitability.


3) Diversify your investment portfolio (“Do not put all your eggs in one basket.” Warren Buffet)

As the saying goes – never put all your eggs in one basket. This is very much applicable to investment too. Due to the risk involved in investment, it is always advisable to speak to your financial advisor to help create a distinct portfolio mix that suite your personal risk appetite. The portfolio will ensure diversity across multiple asset classes with different risk to reward ratio. That way, risk is effectively managed and total loss of funds is hedged against. Investing in a single asset class is quite risky and has over the years been strongly kicked against.

In conclusion, it is important to state that investment must be treated as an art than an act. One must prepare and garner required knowledge before embarking on investment journey. Where in doubt, speak to professional financial advisors or route your investments through credible asset management and investment firm like Concreed Capital.