Seven Simple Principles of Investing

Investing can be an effective way to grow your wealth over time, but it can also be daunting, especially if you're new to the world of finance. To help you navigate this complex landscape, we've compiled a list of simple principles that can guide you in your investment journey. These principles, when followed with discipline, can set you on the path to financial success.

Investing often is just as important as starting early. This way, investing remains a priority for you throughout the year – not just around certain deadlines, like the yearly retirement savings plan. Having a disciplined approach can help you build more wealth over time. When you invest regularly, you can also ease into any type of market (rising, falling, flat). You don’t have to worry about trying to find the perfect time to invest. By simply investing a fixed naira amount regularly, you can buy more investment units when prices are low, and fewer units when prices are high. This can potentially reduce the average cost of your investment over the long term.

Achieving your long-term financial goals begins with saving enough today. Saving for a major goal like a house, post-secondary education or retirement requires significant thought and decision-making. It is vital to know how much you need to begin saving today to have a large enough investment portfolio for your future goals. In general, the more you save today, the less you will need to save in the future to achieve the same goal as someone who invests over a shorter period. Your current income is a useful starting point for calculating certain long-term goals, like your retirement savings needs. The more you make today, the more savings you will likely need to fund your lifestyle in retirement

When markets turn choppy, even experienced investors can become too focused on short-term movements. This can lead to hasty decisions, especially when trying to time the markets. For example, investors see markets rise and jump in – buying high. Or they see markets fall, lose confidence, and sell at a loss. The key to avoiding making rushed investment decisions is to maintain perspective and focus on the long term. With a well-structured plan in place, you can confidently stay committed to it. And you’ll know that day-to-day market fluctuations are likely to have little impact on your longer-term objectives, or on the investment strategy designed to get you there.

When it comes to investing, one of the easiest ways to manage risk and improve your probability of success is to have a variety of investments. You can diversify your portfolio across different asset classes, geographical markets, and industries. Why is this so important? Different financial markets do not move in the same way at the same time. At various points in the market cycle, different types of investments or asset classes – such as cash, fixed income, and equities – will lead or lag. They may respond differently to changes in environmental factors: inflation, the outlook for corporate earnings, and changes in interest rates for example.  When you diversify, you are better positioned to tap into opportunities across different investments as they emerge. This tends to create a smoother investment experience. How? Investments that increase in value can balance out those that are not performing as well

Educate yourself about the investments you're considering. Understanding the basics of how stocks, bonds, and other assets work can help you make more informed decisions. Regularly review your portfolio and stay up to date on market trends and economic developments.

If you're uncertain about your investment choices or need assistance with financial planning, you can Contact Us. We can provide guidance tailored to your specific needs and help you create a well-structured investment strategy