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I get this question quite often ; How do I invest?
and a few years ago, I would answer in a jiffy, rolling out all the investment options and products I know and have personally invested in.
But now I know better.
We all have different reasons for wanting to invest or build wealth.
Sometimes, the decision to invest is a decision that hits us when we get to a certain point in our lives and realize all we've done is, pretty well, spend most of the income we've earned over time
Yep, guilty as charged.
For others, it's the temporary moment when we watch a series on 'The men that built America' or read the Forbes list.
Nothing wrong with that actually. There's nothing absolutely wrong with a defining moment that nudges you in the right direction
However, what's even more important is for you to know exactly 'why' you want to get on the wealth building roller coaster ride.
I started a series on personal investment stories on my Instagram page (You can follow me
here to read the stories) and it's been really interesting to learn how and why some of us get into investing.
One of the investment stories that really resonated with me was Yvonne's story.
" I got motivated to start investing when a classmate of mine shared his impressive net worth with me. What was even more impressive was the fact that he had built it from savings while working a regular job similar to mine before b-school. Afterwards, I got introduced to a financial planner who sent me a 5-page document with loads of questions. This made me realize I had to be very clear on my financial goals. Prior to that, my only financial goal was to 'make money'. My financial planner asked me 'why?' 'for what?' This forced me to think about what wealth is supposed to do for me."
Yvonne tells her investment story around these three elements
1. She got motivated to think about investing/building wealth
2. She took a deliberate step to get a financial planner
3. She had to think in terms of what exactly she wanted wealth to do for her
So let's take it step by step.
You're probably already motivated to start thinking about making specific investment decisions. (I just gave the nudge *wink) so we've covered the first step.
The next step requires you fishing out answers; what deliberate steps are you going to take in the next few days or weeks? Are you going to start setting money aside to invest on a monthly basis? Are you going to get some of your friends together to start an investment club? Get a financial planner?
Whatever you decide to do, don't do nothing.
The final step Yvonne took is a very important step and that's where I actually begin when I get asked the question; how do I invest?.
There's really no point taking the same investment decisions your friends take because your goals might be as different as black is to white.
Why do you want to invest?
Do you want to make the quick buck to augment your current income? Do you want to build wealth that ensures you stay comfortable when you leave your 9-5? Do you want to build wealth you can leave to your children? Are you interested in making an impact on society?
Or do you just want to fund your annual vacation trips and indulge when you feel like?
Your 'why' will ,to a large extent, determine your investment decisions. For instance, you shouldn't start with investing in real estate if you want to make the quick buck. Nor should you be thinking of taking risks when you're working towards leaving your 9-5 in a few years.
If you want to make an impact on society, then your individual funds might not scratch the surface. An investment club where you pool funds with friends and share risks might be a great way to do this.
I must add that your 'why' will change over time as you evolve through phases of life. You probably won't be thinking about leaving wealth to children if you don't have children right now...Lol
That's fine.
We all make choices based on how phase of life. What's important is that we define our key elements as we evolve; The 'why' and what steps to take in the next few weeks till the end of the year.
This will help any investment expert or financial planner (if you get one) understand who you are, what drives you and how they can help you achieve your goals.
So, it's time to take action. I just gave you the nudge you need.
'tis a great season to start making investment decisions