21 Oct 2014

DAY 24: Start To Learn About Investments Today.

invest, sijinius.com

Yes, start to learn about the different investment options that exist, and which ones suit you best.

Investment is defined by Investopedia.com as "An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price."

Anyone who does that is an investor. You can either be an active or passive investor. 

An active investor puts his money in a business and regularly monitors or is involved in the day-to-day management of the business. For example A real estate broker, an enterpreneur who starts a business, a major shareholder in a Public Liability Company (PLC), a stockbroker/trader, etc. While a passive investor is someone who puts his money into a business he/she knows little about, and is also not fully involved in its day-to-day activities. When you put your money in a mutual fund, buy the ordinary shares of a PLC at a public offering, lend out money at an interest rate or fixed your money in the bank, buy government treasury bills and bonds, and so on, you are passively investing. You are not directly involved in how the money is made.

Investments is how the rich become rich and remain very rich, because there are three ways of making more:

    1. Work for money
    2. Let your money work for you
    3. Make other people's money work for you.

The first group includes the average person, who is yet to learn about, understand and practice investing. The second group includes a person who has saved/pay himself regularly and who now wants his money to work for him. But the professional investors, and the extremely rich individuals belong to the third group. They are the people who not only make their money work for them, they also make other people's money work for them, thereby. They understand that you can make much more when you add other people's money to yours in making money.

Now I am not talking about corrupt politicians or civil servants who refuse to pay worker's salaries on time, instead putting such monies in a fixed deposit. I am talking ethical, God-fearing and legal methods of using OPM (other people's money) to make more money for yourself, including avoiding/delaying taxes (government money).

When big corporations like MTN, GLO, Multinationals take loans from banks, when the commercial accepts your money and fixes it for you at a high interest rate, they are using your money to make more money.

In this blog, I shall be discussing different ways of making your money work for you, and using other people's money to make more money for yourself. You can never be extremely wealthy without using other people's money (OPM) to make money for yourself. It is not selfishness; it is the principle of professional investing. 

I hope this has whet your appetite in readiness for the main course on investing to come in subsequent months. Investing isn't rocket science, neither is it for a select few. You can become a savvy investor.

N.B: Bob of Christian personal finance (christianpf.com) has a short investment course, check it out here. Or use this for the full list

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