Many first time investors want to jump right in with both feet but unfortunately, very few of these are successful. Investing in anything requires some degree of skill. It is important to remember that all kinds of investment come with their associated risk... the risk of losing your money! Before you jump right in, it is better not only to find out more about investing and how it works, but also to determine what your goals are. What do you hope to achieve with your investments? Will you be funding a university education, buying a home or car, etc? Before you invest a single penny, really think about what you hope to achieve with that investment. Knowing what your goal is will help you make smarter investment decisions along the way!
Too often, people invest money with dreams of becoming rich overnight. This is possible, but it is also extremely rare. It is usually a very bad idea to start investing with hopes of becoming rich overnight. It is safer to invest your money in such a way that it will grow slowly over time, and be used for retirement or your child’s education. However, if your investment goal is to get rich quick, you should learn as much about high-yield, short term investing as you possibly can before you invest.
You should strongly consider talking to a financial planner or broker before making any investments. He/she can help you determine what type of investing you must do to reach the financial goals that you have set. He/she can give you realistic information as to what kind of returns you can expect and how long it will take to reach your specific goals. However, you must remember that investing requires more than just calling a broker and telling him/her that you want to buy stocks or bonds or whatever. It takes a certain amount of research and knowledge about the market, if you hope to invest successfully.
Meanwhile, having made up your mind to invest and having done the right things, like getting sound professional advice from your broker, you may still make a few investing mistakes along the way! However, there are some 'big' mistakes that you must avoid like a plague, if you are to be a successful investor. For instance, the biggest investing mistake that you could ever make is not to invest at all, or to put off investing until later. You should make your money work for you, even if all you can spare is just NGN1,500 (US$10) a week to invest!
While either not investing at all or putting off investing until later is a big mistake, investing before you are in the financial position to do so is another big mistake. Get your current financial situation in order first, and then start investing. Get your credit cleaned up, pay off high interest loans and credit cards, and put at least three months of living expenses in savings. Once this is done, you are ready to start letting your money work for you.
Don’t invest to get rich quick. That is the riskiest type of investing that there is, and you will more than likely lose. If it was easy, everyone would be doing it! Nigerians very much remember the days of the 'wonder banks' where it was believed that you could deposit just NGN100,000 with them and you would collect NGN300,000 at end of just three months! Where are those 'banks' today? They have moved on, leaving thousands of Nigerian depositors' lives in ruins.
In my opinion, it is better to invest for the long term, and have the patience to weather the storm and allow your money to grow. Only invest for the short term when you know you will need the money in a short amount of time, and then stick with safe investments, such as certificates of deposit or better still, the Treasury Bills (TBs).
Meanwhile, to be on the safe side, you should never put all of your eggs into one basket. This means that you should patronize various types of investments for the best returns. However, don’t move your money around too much... let it ride. Pick your investments carefully, invest your money, and allow it to grow. You should not panic if the stock drops a few dollars because if the stock is a stable stock, it will surely go back up in no time.