As an adult, one thing you can’t shy away from are bills; from school fees to house rent, reoccurring utility bills, grocery shopping – it can be a lot! So because of these expenses, may people always look for how to earn extra cash. And to mitigate against the impact of these expenses, people also turn to investment vehicles.
Almost no one argues about the benefits of investment to personal finance or finance freedom. But only few people get investment right. So how to you avoid the mistakes most people make when investing?
AXA Mansard has curated a list of 8 Wrong Investment Decisions Common with Working-class Nigerians.
It is easy to get enamored with various investment opportunities available. The very idea of doubling your money quickly could make you commit some grave mistakes you ordinarily wouldn’t. Who can blame you though? Some deals are just too good to resist, and you’ve got bills to pay.
The ideal thing is to identify these mistakes, learn how to avoid them and build your way to financial freedom. So let’s jump in:
- Going into Investments blind
We already established the fact that some deals just sound too good to resist. Companies tend to make their investment plans sound much more than they are worth. A lot of people fall victim to their own ignorance. Most people are especially in the habit of investing because of ‘word of mouth’. They invest simply because someone they know, invested. So the rule of thumb is don’t put your money in any venture you don’t understand. Investing is some form of risk-taking but going into an investment you don’t understand is having no chance to appreciate the risk at all. Do your research to find out how the business operates and makes money. If in doubt, speak to professionals.
While slow and steady may not be appealing today anymore, investing is a different ball game. Return on investment is not dramatic. Sure; some investments return dividends to you faster than others, but there is no magic. It takes time to really reap the benefit of investing. So, keep your expectations realistic with regards to the duration and growth of your investment portfolio.
- Investing with Emotion rather than Logic
Investment is one business that should be done without sentiments. It requires your 100% focus as well as a logical and rational approach. Don’t feel pressured to invest against your better judgment because you have sentiments towards the business owner, the person who’s introducing you to the business or any other emotional reason. It’s your hard-earn money, you have to guard it jealously.
- Investing beyond Your Capacity
Investing is a good thing and should be encouraged. But investing everything you have or even going into debt to invest is not advised. Yes, there might be some juice deals that just want you to go all in so you can reap good returns, but as we have said earlier, return on investment takes time; and if you have put in all you have, it might be challenging to survive the maturity period of your investment. Avoid making spur of the moment investment decisions. Only invest the much you can at a particular time. You can make more investments with time.
- Ignoring the tiny prints in your investment’s documents
Yes, we understand that many people do not enjoy reading, much more when they have to squint to get the information. We all fall victim of this at one point or the other. Just like the time you clicked on the “I have read all the terms and conditions” button while signing up for a service, when, you haven’t. It’s human instinct to want to skip a demanding exercise and move on to the next thing but when it comes to your investments, you should take that extra time to read through it all. If you will make good investments, it will start with understanding the terms and conditions.
- Disregarding professional advice
As incredible as it sounds, people really make the mistake of disregarding the professional advice. This often comes from a sense of overconfidence in one’s ability. To stay on top of your game in investment, you need to be toe-to-toe with the market and market situations, seeking professional advice before making decisions may be your easiest way to achieving this. Remember, expertise is built over time, learn to rest on the shoulders of those who have gone ahead of you.
- Failing to diversify
You may what to consider diversifying your investments portfolio rather than putting all your eggs in one basket. This gives you an opportunity to spread your capital amongst different investments so that you’re not reliant upon a single investment for all of your returns
There is no right time to start investment deals. There is no set amount that you can start with either. Those reasons you have for holding back are probably baseless. Don’t put it off for next time. There really is no time as good as now. The longer you wait before investing, the more elusive your financial future seems. There are investment vehicles for a low as N2,000. Don’t wait till you have the million to start.
If you want to know more about AXA’s investments plans, please visit AXA Mansard website at www.axamansard.com to get started. You can also call us on 0700-AXAMANSARD.