It’s true that every investment involves some risk, but some are generally more unpredictable than others. If you have a long-term goal, you may have time to ride through the market’s ups and downs and thereby even-out the impact of risk on your investment. On the other hand, if your goal is short-term, you may want to opt for a more conservative approach, because you won’t have the luxury of time. If you’re comfortable taking risks and you have big goals, you may decide to invest in riskier options. If you’re a conservative investor, you’re likely to prefer safer investment options, even over the long term.
How long do you want to invest?
When many people are investing, they are thinking of how soon they can get their money back depending on their time frame. Time frames vary for different goals and will affect the type of risks you can take on. For example: If you’re saving to buy a land and build your home in a couple of years, investments such as shares or funds will not be suitable because their value goes up or down. Stick to cash savings accounts and the likes of it. If you’re saving for something you need like 20 years ahead you can ignore short-term falls in the value of your investments and focus on the long term. Over the long term, investments other than cash savings accounts tend to give you a better chance of beating inflation and reaching your goal. However if you are looking for a way to make a quick cash from your investment, which is common with many Nigerians today you may want to opt for a reliable ponzi scheme, however this may not be a good option as ponzi schemes cannot be trusted.
What type of investment can I venture into?
What determines this is how much of a risk you are willing to take. Here are a few:
Fixed Investments: These could be bonds or debentures; however the investment has a connection with inflation rate. It is a great investment if you are not willing to take risks.
Cash Investments: Savings account and term deposits fall into this category, even though it has a low risk it comes with a very low returns on investment.
Real Estate: This involves you investing in buildings, lands, houses and factories, the risk of this usually varies from medium to high. However returns on investment are a bit favorable.
Equities: An example of this is shares; this comes with a very high risk because it is influenced by economic and global factors.
Ponzi Schemes: Technically they shouldn’t be considered an investment but rather a peer to peer donation scheme with no real structure and sustainability. This is a very high risk investment and you need to think twice before putting your money in it.
There are so many other investment options out there and we will bring you more from time to time.