Ever wondered how money works? Is there a secret key to unlock wealth? There is a saying which goes “When you’re aiming to reach the top of the mountain, it is wise to follow the footprints of those who have successfully made the climb before you.”
Whether you’re following closely the footprints of great investors like Alhaji Aliko Dangote (The richest man in Africa), or Mike Adenuga (business tycoon and owner of Globacom), there are certain sets of values you could pick up. Soon enough, you realize that investing is in fact not rocket science (literally).
So if you’ve ever wondered how you can be a great investor, these top 5 rules should get you started just right.
- Invest in yourself
You have probably heard this one many times. But think about it this way to make it simple; “You’re only as important as the value you add”. Yes that’s right, you want to make a difference in the world? You want to be a great investor? You need to invest as much of yourself as you can. You are your own biggest asset. In a CNBC interview, Warren Buffet said “Anything you do to improve your own talents and make yourself more valuable will get paid off in terms of appropriate real purchasing power”. Let that sink in.
It is also important to note that while investing in yourself, you should also invest in your team. Dangote says he has invested in his team so much that they never begin a project without executing it.
2. Invest in what you understand
In 2012, Billionaire investor Aliko Dangote told MTV Base in an interview that he never invested in anything he did not understand completely. As an investor, you’re going to have to minimize risk and capitalize on opportunities. You’re going to have to make quick money decisions for the long term. According to Forbes, the more you know about personal finance, “the more security you’ll have as you minimize risks.”
P. Morgan understood this rule and kept pushing in his investments despite the setbacks. Learning is an unending process, and money is ever evolving, but the fundamentals remain the same. Get yourself educated and watch your investment lifestyle grow.
- View money as a Long-Term goal
Ever heard the saying, “someone’s sitting in the shade today because someone planted a tree a long time ago”? There’s a dangerous effect to thinking short term when it comes to investing. The greatest investors never thought short term. The reason why wealthy people make better solution providers is because the “money” factor isn’t their motivation. Mike Adenuga, a business tycoon, says the important thing is learning to plan long term. As a successful business investor, viewing money as a long term goal is a key component in his day to day life. They think long term. So start today, invest in stocks without focusing solely on moments of market volatility, invest in real estate without focusing on current location, or invest in cryptocurrency. Whatever it is, view your finances as a lifelong journey.
- Give back to the world
There is a reason why a lot of wealthy people indulge in charity, and no, it is not because they have excess cash. It is because, when you get to a certain level, you realize that there’s no apparent satisfaction that comes from always receiving. We owe it to humanity to give back. Again we have to remember, success is a habit. There are numerous advantages of giving. One of them being taxes. If you set up a non-profit foundation, all the money you spend on it is income you don’t pay taxes on. There is a convention in South Africa concerning charity? You donate; foundation buys the plane tickets, and you don’t pay taxes on that money. Your spouse needs to drive a lot for charity works? You donate to the foundation, which buys a car, tax free. You help someone today, you build your network. Visit an orphanage, help your neighbour, make it a habit to help at least one person a day.
PS: giving back to humanity doesn’t always have to be monetary.
- 5. Understand your environment
Nigeria is a very complex and interesting nation. There are a thousand investment opportunities that will pay in the long run. Hacking into those opportunities, however, seems to be a struggle. As the saying goes, “when you live in Rome, behave like a Roman”. To be a great investor, you need to understand the business dynamics of the industry. Quite a number of things might differ from the typical pattern. For example, if you’re buying a plot of land in Nigeria, you’re going to have to take into consideration the “omo-onile”. These are the set of people you don’t want to get in bad terms with. They are basically “land grabbers”who feel entitled to land as a result of having family roots in the respective communities where lands are sold.
There you have it. Top 5 secrets that aren’t really secrets, but will go a long way in helping you succeed in your quest.
David Edet writes for Nairametrics