MAKING THE RIGHT INVESTMENT

 Sister Lola Odeleye

Everyone looks for ways of making additional income apart from their normal source of earnings. Investing is good, making the right investment is not only great but also maximixes your wealth pool. Investment is the act or process of acquiring assets for the purpose of generating short or long term income. Investments can be looked at from two broad categories: spiritual investment and financial investment. Spiritual Investment is the act of investing your resources, time and talent for the kingdom of God. This is a worthwhile investment because you can never lose your investment when you are in partnership with God. (Matt 6:20-21, 33). When you use your time, resources and talents for God; you are positioning yourself for greatness. One other type of investment that we want to discuss in some details is Financial Investment. Many of us are not financially savvy when it comes to investment; these few tips will guide you.

 

Financial Investment (FI): This can be looked at from two areas. Growth investments which are more suitable for long term investors who are willing to take risks and able to withstand market price fluctuations.  Shares and bonds are best for long-term growth. Defensive investments which are more focused on consistently generating income, rather than growth, and are considered low risk than growth investments.

FI can be further subdivided into four different types:

1. Stock (shares): It is investing in a company with the goal of receiving dividend as your return on investment. When you buy a stock, you are in fact buying a small piece of the company’s earnings and assets. Investors make money when they buy shares at a low price and sell when the price is high.
2. Mutual fund also called unit trust. These are designed for those who are newcomers to the world of investing. It allows investors to buy large number of shares but employs a professional expert to manage the investment.
3. Property investments: These are investments in properties. Property is considered to be a growth investment because the price of property can rise substantially over a long term period. Property can also fall in value and carries the risk of losses.
4. Fixed interest securities, including bonds. A bond is a loan you provide to the government or government agency. When you purchase a bond, you are allowing the bond issuer to borrow your money and pay you back with interest at a later date. They can be sold relatively quickly.

Other types of investment include the low yielding bank cash or savings accounts. Exchange traded funds are high risk and high yielding investment which sometimes require the help of financial experts. Whatever investment you choose, you must be aware that each type comes with distinct characteristics, risks and benefits. It is possible to have a combination of these investments, depending on your desired goals, personal financial circumstance and risk tolerance profile.

 

Process and conditions for successful investment

• Draw a personal financial plan: Before making any investing decision, you need to have an honest look at your entire financial situation. Understand your goals and risk tolerance.
• Evaluate your comfort zone in taking on risk: All investments involve some degree of risk. If you intend to purchase securities, it is important to educate yourself on these securities to avoid losing your investment.
• Diversify your investment portfolio: By investing in more than one category, you will reduce the risk of losing money. If one category of investment fails, you will be in a position to counteract your losses with better investment returns in another category.
• Create an emergency fund: Some investors put enough money in a savings product to cover an emergency situation.  Some make sure they save up some of their monthly income in an interest yielding account such that if an unplanned event occurs, they have a safety net to fall back on. That is wisdom.
• Pay off high interest credit card debt: If you owe money on high interest credit cards, the wisest thing you can do is to pay off the balance in full as quickly as possible.
• Avoid circumstances that can lead to fraud:It is recommended that you ask questions and check out the answers with an unbiased source before you invest. Always take your time and talk to trusted professionals before investing.
• Put a tab on cash flow: Be disciplined with your cash flow. Manage your cash flow with a realistic budget. Buy what you need, and indulge in luxuries only when you can afford it. It is not wise to pile up debts on many credit cards when you know you do not have the means of paying them off.

In summary, be a wise investor by making the right investment. The decision is yours to make. The Lord will give you the wisdom and guidance to make the right investment.