How to Start Investing and Making Money in your 20s
Lots of people especially at this age believe that investment is for the rich or educated alone. This is not completely true. Investment is not meant for a particular class of people. The low, middle and high class in the society can invest; what and how much that is invested and the anticipated returns might be the differential case.
I was reading a business magazine and came across an article titled “You can invest”. I was attracted and read through the article. There were some points in that article about the investment that triggered my writing of this post.
But before we continue, we should first understand in simple terms what investment is:
Investment is simply the act of putting money or resources into an activity that yields profit. The ultimate aim of every investment is profit or simply an increase in whatever was invested.
How anyone Can Start Investing
No matter the class you belong to, you need to start investing now. One of the best ways to start investing today is to take the time to learn about what investment options are available. You can often find quite a few helpful articles on google or by asking for help from a professional financial advisor.
Start by saving a percentage of all your earnings by choosing not to spend all. When it gets to a certain amount, you can then decide on what to commit the money into so it can yield an increase over time. Also, the investment can also be in the form of storage of resources or agricultural produce or anything with value for example gold, palm oil, rice, land, and any other thing with value. The act of Investing is as old as man and occurs in every level of society.
Here is an example of a resource investment as cited in the article, “when Palm Oil is in season, some people buy it in large quantities and store it till it is no longer in season, and it becomes scarce. They then sell it at a higher price. Consequently, they end up with more money than they had before (all things being equal).”
This is an investment in Palm Oil trading. Some people invest in other agricultural produce. It is still an investment. In some cases, the money is contributed and given to the palm oil trader, who uses the money to do the business and returns the money with interest or profit, depending on the agreement.
This principle is the same in all kinds of investment, from share purchasing to fixed deposits, bonds, or real estate. The goal remains the same; increasing what you have today by saving and committing the fund/resources into an activity that would generate profit and increase the value of the original capital.
We should note that for one to start investing, one must be disciplined and principled. For one to invest, one must learn to save. The amount to be saved should be exponential. You can start with very little and increase it over time.
Do not say I have a little income and cannot save out of it, NO, you can save even if you earn N10,000 monthly. Savings is a matter of choice and discipline. There are high earners that still find it difficult to save because of their lifestyle.
Investment and reinvestment have always been major keys to entrepreneurial growth. As a startup or entrepreneur, one cannot grow without saving and investment.
Difference between Low-Level and High-Level Investment Returns
I want to state here that there is no investment without risk. Yet the higher the risk, the higher the prospective returns.
The main difference between the two classes of Investment is the return. If Mr. A and Mr. B are high-income earners and have N1 million each for investment and both wish to invest in the shares of TheTotalEntrepreneurs PLC selling for N1 per share. Mr. A out of fear of what the future might hold may decide to invest N500k and keep the remaining in his bank account while Mr. B invested the complete N1 million. If after a year the share of TheTotalEntrepreneurs PLC grew by 100% (i.e. now selling at N2 per share) and both Mr. A and Mr. B decide to sell their shares, Mr. A is assumed to have in return N1 million for all expenses ignored while Mr. B will receive N2 million. Adding the remaining N500k to his return will still not be up to what Mr. B has. Also, note that there are tendencies that Mr. A might spend the money in the bank when family or personal issues arise.
In as much as both men had a 100% increase, Mr. B made more money. This was because of the amount invested.
A low-income earner can save, invest, and reinvest if he wishes to become a big investor in the future.
Now some people make the mistake of putting money in banks’ Savings accounts and calling it an investment. This is not an investment; you are just providing your bank with cheap money to trade with. At best, the bank will pay three percent (3%) as interest, but it will lend the same money at 25 percent. Meanwhile, if you withdraw from the savings account more than twice in a month, you lose interest for that month.
Conclusion
A low-income earner can save, invest, and reinvest if he wishes to become a big investor in the future. There are quite a number of investment types and channels; it all depends on personal interest and the fund available. So I advise my fellow total entrepreneurs to start investing today no matter how small. Warren Buffett started with a bottle of coke, a gift from his grandfather that he resold at a higher price over a period, today he is an investment guru and people look up to him, you too can start small, be consistent and disciplined and you will be poverty-free. Peace.
Do share your thoughts, the investment types you are into, your experience with investing, and your contribution in the comment below.
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