HOW TO INVEST YOUR MONEY IN YOUR 20's

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Now before you rush into investing your money in any investment product, I think it’s worthwhile you read the following tips on the best investment product to invest your money in. What should you invest in?

*1. Invest in something you understand*

There’s a strong inter-relationship between business and investing. Just as it’s advisable you start a business with a thorough understanding of the industry you are going into; the same is applicable to investing. 

Sometimes I find it funny that people actually start a business or buy an investment product based on the recommendation of a friend or their financial adviser. Others invest in an investment product just because someone succeeded with that same product.

Without financial knowledge, people look for someone to tell them what to do and where to put their money. Just like Lemmings simply following their leader, these people race for the cliff and leap into the ocean of financial uncertainty; hoping they can swim to the other side.

Sincerely speaking, I believe this approach is wrong. Understanding is vital to any endeavor you find yourself in life including investing. Don’t jump into any investment; be it stocks or real estate without first understanding the intricacies of such investment. 

Lack of understanding is the primary reason why investors panic in an economic downturn. With understanding, you will be able to maximize your profit; manage risk and minimize your loss in any investment.

*2. Invest in something you are passionate about*

Passion is what keeps you going when the going gets tough.

Do you know why Warren Buffett emerged the world’s richest investor? Or Donald Trump the biggest real estate developer in New York City? 

The answer is that they are both passionate about their chosen investment field. You have to be passionate about investing to get the best out of it; you must love the game regardless of whether you win or lose. 

Never invest in something you are not passionate about; you will only end up with heartache.

*3. Invest in something you are willing to learn through*

Life is a teacher; the more we live, the more we learn. The only thing constant in life is change and in the world of investing; such change occur very rapidly. Now how do you stay in control when the tidal wave of change comes? How can your investment strategy stay relevant in times of change? 

The answer lies in continuous learning. Investing is like a rapidly flowing river and to stay on course; you have to be on the edge, ever ready to learn.

Never invest in something you hate learning about; no matter how lucrative it may be. If you find reading annual reports boring; or you hate charts, math, calculations and all the jargon associated with technical analysis. Then stay away from stocks. 

If you hate fixing toilets; then stay away from real estate or better still, partner with someone who loves fixing toilets. 

The lesson I am trying to emphasize here is this: never invest in something you are not willing to learn through.

*4. Invest in something you are willing to stick with*

For everything there is a season. Business and investing has its good time and bad time; highs and lows. If you are not persistent enough, you will give up. 

So before you commit your money to any business idea or investment; be sure you are prepared to follow it through to the end, which might lead you to either losing your money or making some profit. 

Never invest in something you are not willing to stick your neck with.

*5. Invest in something you have control over*

Lastly, control is one of the most important criteria every successful investor looks out for in an investment. Never lose control of your investment because control is essential to risk management. 

The reason I chose building a business as my best investment opportunity is because I have absolute control over it. I can increase my sales, control my cash flow, adjust my liquidity ratio, and sell the business or hold. 

I equally know the necessary buttons to press to increase the value of my business if ever I decide to sell. That’s the power of control. I know a lot of investors who have conceded their power of control to stockbrokers, fund managers, financial advisers and analysts. Don’t do the same.

As a final note, these are the five factors I feel are most important to cross check before sinking your hard earned cash into any investment. 

Never fall in love with an investment opportunity without first considering these factors because they are fundamental to sound investing and wealth building. 


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