Investing is not the same as saving. While both involve putting money aside towards your goals, investing carries some level of risk with the hopes of generating substantial or higher returns than an average savings account. More often, the higher the risk, the higher the returns. That’s why high-risk investments need to be properly evaluated because the possibility of losing your capital is very real. It’s equally important for you to understand your personal risk tolerance. This means gauging how comfortable you are with risk or how much volatility you can handle.
Investing allows your money to grow at a faster rate, thanks to compound interest. Compound interest is the interest you earn not only on your capital invested but also on the interest you’ve previously built up. Today’s interest will start earning interest tomorrow. Every time you put off investing, you’re losing thousands of Naira in the long haul.
“Compound Interest in the eight wonder of the World. He who understands it earns it. He who doesn’t pays it” – Albert Einstein.
Before investing, there are certain steps or guidelines to bear in mind. Let’s delve into them.
- Understand your investment goals: Before investing, you must clearly understand why and what you hope to achieve. Do you want to save for Japa, retirement, a new car, a certification or generate passive income? Your investment goals will help you determine the type of investments right for you and the level of risk you’re comfortable taking.
- Do your research: Take the time to learn about different investment options, including stocks, bonds, mutual funds, real estate, impact investments. Research the risks and potential returns of these asset classes, and consider consulting with a financial advisor if you need help making investment decisions.
- Diversify your portfolio: It’s essential to spread your investments across different asset classes and industries to reduce the risk of losing money if one investment performs poorly. This means investing in a mix of stocks, bonds, and other securities appropriate for your investment goals and risk tolerance.
- Consider your time horizon: Your investment time horizon refers to the time you plan to hold an investment. If you’re young and investing long-term, you can take on more risk, as you have more time to ride out market fluctuations. Suppose you’re investing for the short term. In that case, you may want to focus on more conservative investments like bonds and mutual funds that are less likely to experience significant fluctuations in value.
- Be patient and stay disciplined: Investing is a long-term game, and it’s essential to have realistic expectations about the returns you can expect to earn. Resist the temptation to make emotional investment decisions based on short-term market movements, and stick to your investment plan even during periods of market volatility.
- Choose the right investment partner: By investing with HerVest, you earn highly competitive rates on your capital and make impact by providing access to credit and resources for smallholder women farmers and female entrepreneurs. You can also invest in dollars (US rental properties and fixed incomes) while earning up to 10-14% interest on your money.
Overall, remember that successful investing requires patience, discipline, and a long-term perspective.
Ready to grow wealth? Then join the HerVest community of smart money women and men saving and investing towards their financial goals. Earn highly competitive rates on your money when you sign up today. Click the link to get started,