We don't have to be smarter than the rest. We have to be more disciplined than the rest. This is a statement attributed to Warren Buffet, a renowned investor who has made billions of dollars by practicing what he believes. What is your personal philosophy on financial investments? Shall we explore?
Let us start by dealing with one of many myths about investing: “Investment is for people who have enough money to spare; hence people who do not have enough cannot invest”. That’s untrue.
Can you believe that your ability to invest has absolutely nothing to do with how much you earn?
Did you know that anyone can and should invest?
You may be surprised to know that you can start investing with very little, as little as how much you would spend on lunch in a day. Amazing right? The real trick to successful investment is building the habit of a consistent investor. An avid investor with a small amount will make many more strides than a rich arbitrary investor. The secret is consistency.
An idea often used as a substitution for investment is savings. Saving with a good bank or crypto wallet is encouraged because it is where money is secured and also, one stands a chance to earn a little interest on the saved amount. However, it should not deter people from investing an amount or a percentage of it in a system that will earn higher returns. After all, many people with savings treat them as untouchable monies, hence the question: why not invest it instead? Savings are ideal when the funds are intended for use in the short-term. Thus, you can access it easily when needed, and earn little or no interest. Savings are great but not the best option for idle funds. If you want to put money away for a rainy day, you need to consider finding an investment product or scheme that is safe and can give you decent returns.
When funds are left idle (uninvested ),the purchasing power of those funds is significantly eroded over time.
The concept of "Time Value of Money" teaches that a sum of money today is worth more than it will be worth in the future. This simply means that the amount of goods or services that GHS100 can pay for today, will not be the same in 12 months' time; that same GHS100 in 12 months' time will buy less than it can buy today. Of course, with high inflation, real purchasing power declines each day.
We should not leave money lying around without investing in an asset which will appreciate in value, despite inflation. Saving allows you to store up money for a rainy day; one which might never come soon enough, whereas investment allows you to earn an interest on your stored up amount while you wait for the future. Delayed investment is an opportunity lost.
I learned early in life that the reason the myth I discussed above has gained so much root, is our culture of spending. We consider many things to be more important than they actually are, and so once we earn an income or receive cash gifts, we immediately think of paying for every other thing but ourselves.
Young persons without much responsibility today may be tempted to enjoy their youth when in fact, they ought to be preparing now for the lean season where there will be myriad demands on their incomes. It is important to live for today but tomorrow can only be enjoyed when we prepare adequately for it. So, investment is not only for the old, but also very much for the young. Investment is for everyone, young or old, rich or poor.