Yinka Ogunnubi has put together a brilliant collection of golden nuggets on life and living generally. Although the collection focuses on Financial Management – something that many people ﬁnd rather daunting, it is written in an easy-to-follow, everyday language that most people can relate to and understand.
Below are the first ten(10) golden nuggets from his E-Book.
1. IF YOU CAN’T EXPLAIN IT TO A 6 YEAR OLD, THEN YOU SHOULDN’T BE INVESTING IN IT.
The more complicated the investment, the more confused you will be. Chances are that you are no expert in this ﬁeld so it pays to keep it simple. If it’s complicated to you, then it is likely to be too risky for you. Don’t invest in what you do not understand!
2. EVER READ A BOOK ABOUT STUPID INVESTORS?
If the answer was yes, good. It just might be talking about you. Read it again. We have all been there, making those investment decisions we thought were the best. We thought they would give us the highest returns or be most secured. Call it MMM or CCC, APC or even PDP, point is, it pays to read about stupid decisions made by stupid investors. That way, we are prevented from making similar stupid investment decisions.
3. DIVER…WHAT? WHAT DOES DIVERSIFICATION MEAN? Well it’s pretty simple. It’s about not putting all of one’s eggs in one basket. Think about it like having eggs (monies) in different baskets (types of investments). That way, if the eggs in one basket went bad, there would be other baskets with eggs as well and so you will not lose all your eggs.
4. “RISK IS RELATIVE”. DETERMINE WHAT YOUR RISK APPETITE IS. You must be sure what level of risk you are comfortable with and you must be assured of this before deciding to invest. Focus on yourself, not on what Mr. A or Ms. B is doing. What you may consider too risky may be less risky for another. Also, some investment promoters could hype the risk around an investment to extract more from you in fees. Learn to read in between the lines.
5. SPOILT FOR CHOICE? “CHOOSE THE ONE WITH THE LOWEST FEE.” KAPISH?
Chances are that you are not likely to understand every investment product being offered for inclusion in your portfolio. When confused, use a rule of thumb. Chose the one with the lowest fees. You can’t lose both ways.
6.COOKING TIME? ONE WEEK AT LEAST! The point is – Never be pressured into making hasty decisions. Whenever anyone tells me that if I don’t make a decision to invest or pay for something before a given time, I’ll lose it, it is usually a red ﬂag for me. Any investment you haven’t spent at least a week thinking about or working through is not worth your consideration.
7. WOMEN ARE INTUITIVE. For some reason I can’t explain, women can spot a bad investment from a mile away. If you are married, involve your wife in your investment decisions. Trust her intuition and learn to use it as a litmus test. It could literally save you millions.
8.DOES IT MURDER SLEEP? No one ever said investing was synonymous with inducing a high BP. An investment should guarantee you residual income so choose investments where you can sleep with both eyes shut, assured that your money is working for you and not for your heart doctor. Always choose your peace of mind. If it makes you unable to sleep at night, then you probably shouldn’t be investing in it.
9.IT IS NOT THE END OF THE WORLD. Life can be cruel to those who make bad investment decisions, so make up your mind not to be a statistic. However, chances are that you will learn more from your bad investment decisions than the good ones. You can get away with not being a great investor, but you cannot get away with being a bad one.
10.ASSUME THE WORST, HOPE FOR THE BEST, ACCEPT REALITY. This may not go down well with religious folks and I hope my pastor is not reading this but it is a simple investing tip. Look, the point is this, have three scenarios. The base case, the best case and the worst case. If you can break-even in the worst case scenario, you have a pretty good chance of succeeding.
Culled from ’50 Personal Finance Nuggets and Tips by Yinka Ogunnubi.’
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