How to Start Investing. A golden rule of financial investment is that it’s always wise to plan for the future. You never know what future expenses or commitments you may have. Buying a home or an investment property or planning for retirement all requires savings.
But if you simply save the money you earn without investing it, inflation will eat away at its real value. Smart savers, therefore, understand the importance of making investments to earn financial returns greater than inflation.
Nowadays, there are a wide variety of investment opportunities available. These range from investment plans for the more conservative investor who prefers steady returns and stability, to those for the more experienced investor who is prepared to take more risks, and enjoy higher returns.
Some of the popular types of investments include contributing a monthly sum to long term mutual funds or buying stocks and shares in listed property companies. For those who are keen on more active real estate investments, this may be through buying properties directly, investing in commercial property bonds or investing in REIT’s.
Financial Investment for Beginners: How do you get started?
Financial investment means setting aside a fixed amount of money, either on a one-time lump sum or regular monthly instalments and aiming to achieve a gain from such investment within a set time frame. Naturally, some beginners may hesitate before parting with their hard-earned cash, but the rewards or returns from prudent investment can help provide for a secure future.
However, before making any investment, there are several key steps to be followed if you want to be a successful financial investor:
1) Ascertain what type of investor you are:
Almost all financial investments carry a degree of risk. A smart investor always does his/her best to mitigate such risks and ensure that the rewards are suitable for the risks taken.
The first step though is to decide what type of investment suits you best in terms of your risk tolerance. Are you a conservative investor looking for returns just slightly higher than inflation, but where your initial investment (or capital) is secure? Or on the other hand, are you looking for an investment where there is the opportunity for capital growth as well as an above-average annual return? The returns may be higher, but so maybe the risks.
Some investors let their emotions dictate their investment planning or worry all day and night about the performance of their investments. Others keep their emotions under control and focus on longer-term targets. You just need to be sure which type of investor you are.
2) Decide how much you wish to invest and why:
There is always a great temptation to over-invest when it seems that the predicted returns from a financial investment are very attractive. Yet, beginners should also be wary of under-investing where their overall gains are relatively small.
Good financial planning plays a pivotal role in financial investment. It is not prudent to invest simply for the sake of investing and is vitally important to understand why you intend to invest the money and what your objectives are. Any investment needs careful analysis and a focused approach before committing funds.
Only invest what you feel is appropriate for your budget and certainly don’t invest all of your spare cash into high risk, speculative investments. Most smart investors build a balanced investment portfolio with a spread of lower risk, secure investments such as higher-yielding bank time deposits or real estate investments in commercial property bonds. They invest smaller amounts in riskier ventures offering greater rewards.
3) Make sure you do the right type of research:
If you have decided that real estate investment is the preferred route, a good starting point is to research the different rates of investment returns for each property asset type. Also, find out the underlying reasons why these rates vary so that you understand the driving factors behind the market(s).
Explore as many of the different types of real estate investment offerings in the market as you can. Study the pros and cons of each investment in detail. Analyse the various risk factors carefully before reaching any investment decision. It’s always wise to only invest in something which will give you the maximum return with the least amount of risk you feel comfortable with.
4) Which types of assets are you most interested in:
Different real estate investors, of course, have different views on the prospects for each market sector. Some see the commercial sector (offices, coworking spaces or retail units) as offering the best returns. Others see the residential sector (apartments, serviced apartments or rental units) as being likely to outperform.
The research you have undertaken previously will help shape your views and ultimately your decision as to which sector of the Nigeria property market to invest in. It will also help you determine your yield objectives, as well as your expectations on future capital growth.
5) Make the right decision:
Now that you are armed with all of the knowledge and information that you think you need, it’s time to make the right decision. Do you wish to attempt to invest directly into a property in Nigeria or is an investment into a commercial property bond more appropriate for you?
Assuming, of course, that you have the capital or can raise enough funding, direct investment into Nigeria real estate can be very lucrative. Yet there are also many potential pitfalls and hassles. Your knowledge of the market sector you are interested in, as well as construction, permits, licences, planning approval and so on all, have to be first-class and up to date. Experience and a long track record of working in the Nigeria market is also essential.
On the other hand, investing in commercial property bonds takes away almost all of the headaches associated with direct investment into the property. Importantly it also enables investors to capitalise on the track record, experience and knowledge of a developer who is active and well-established in the Nigeria property market.
For many investing in commercial property bonds is a far easier, often more rewarding, way to start investing.
So, why not look more closely at commercial property bonds?
For those making their initial foray into financial investment, commercial property investment bonds are, therefore, a great way to go. Investing in commercial real estate bonds can be an excellent first step for aspiring investors—without the worry of development-related hassles.
Unless you are involved in the real estate market full time, you can’t expect to know everything about how to maximise your investment returns.
Some of the attractions of commercial property bonds(https://www.naogroup.
- the bonds are asset-backed, so there are always underlying assets to generate the required returns;
- investors can start to invest without the need for a mortgage or loan or saving up enough to buy a single property;
- collective experience and insights, together with shared liabilities, help to mitigate risk substantially;
- individual investors can benefit from the profitability associated with the property sector, without all the downsides of direct property ownership; and
- some of the most attractive returns currently available are generated.
Property investment bonds also enable investors to avoid paying maintenance fees, stamp duty, council tax, insurance payments, tenancy issues and still invest in the Nigerian property market without taking on debt.