Are you ready to be an Investor?

A lot of people seem to not know what kind of investors they are or for that matter in what ways that they can invest their hard earned money. Most often, we see people start to worry when they are close to retirement on how they haven’t saved enough to retire. Do we really want to expose ourselves to such a situation when we grow old? I have time and again said, I have nothing against enjoying life when we have the energy to, but it also important that we maintain our conscious that we can only have that energy for so long and realize that we need a nest egg when our bodies won’t be able to support such a lifestyle.
I will therefore dedicate today’s page to help us understand ways that we can invest. Some people choose to have cash in their banks and money market funds. While I have nothing against holding cash, why should one hold funds in cash when you can be earning a return on the funds however little that amount may be?
If you are ready to be an investor here are my tips on ways that you can invest, these include real estate, bonds, preferred shares and also common stock. I find that a lot of people go out and buy common stock in reputable companies and even upcoming companies. While this may be a good strategy, it is always important to consider what levels of subjective and objective risks that you can afford. Remember that with stocks, you are placing your future on the company’s managers/CEOs, of which you do not know their skills, loyalty to the company and even the priorities that they may take, which all affect the growth potential of the company. Investing in bonds and preferred shares, offers you less but steady return and you are also insulated against most mismanagement. I have always argued that real estate is an area that one cannot go wrong, though one can argue the example of the collapse of that market in the USA. I would laugh it off as a one off! Most often times than not, real estate gives you capital appreciation and of course one builds equity.
As we contemplate, discover and learn new ways of investing, we need to minimize our exposure to risk, because investors suffer from company defaults, credit crunches and even inflation. We need to set our goals on how much savings we expect to have and the risk that we can assume. Obviously, the younger you are the more risk you can take, because with a younger age you can afford to take risks as you will have enough time to recover. That is why I have always argued that investment and money management should be part of our school curriculum. We do not want to end up being desperate in our investment endeavors as a result of being late in starting to invest; there is no jackpot in investing! Take time to learn investment techniques and also understand financial data, only then can you grow your portfolio. I have said it time and again there are many financial books around, take your time to read as many as you can.