Investor Beginner Guide

New to investing, don't know where to start? Start here👇

If you are hesitant to invest because you are confused and unsure of where to start, then this article is for you. I am so glad you are here and that you are taking the first step towards your financial journey, which is financial education and literacy. I hope this article gives you the push to get to the next step which I know can be scary but you need to make that step to see the next one!

I will take you through the process step by step from the basics.

1. Source of income.

Yes! when I said from the basics I really meant that. A lot of people skip this step. This is the foundation of wealth. You need to have a source of income either from your business or office job etc. The current generation is pressurized to fasten this stage. Imagine its fine, you don't need to join the 'get rich fast' scams. Instant gratification will leave you stuck in a cycle, so slow down and take your time in this step.

2. Understand your goals.

Goal based investing and saving will keep you grounded and accountable. Write down your goals of investing whether its retirement, passive income, financial independence. Be specific and include the amount needed for each. After specifying your financial goals, categorize them between short term, medium term and long term goals. Note down the most urgent to the least urgent. Urgency is obviously subjective depending on your age, dependents if any and life goals. After all this is clear and noted start with one goal at a time to avoid financial fatigue and lack of motivation in the long run. We want to make it fun.

3. Create your financial foundation.

When I say financial foundation, I mean get your emergency account funded, debt cleared and budget so you know how much you can invest consistently.

Emergency fund is simply setting money aside incase an emergency comes up. One thing I encounter with most people is saving in the wrong avenues. Let financial institutions do the job they are supposed to in the financial markets.

To clear debt you can either use the snowball method or avalanche method.

There are a lot of budgeting methods starting from 50/30/20 to zero based. Choose the one you are most comfortable with.  

4. Start small and stay consistent

Consider starting with beginner friendly investment e.g mutual funds as you accumulate money and research about other investment instruments. Automate your savings and compound the interest you get until you reach your goal.

Lets say I want to generate a passive income of 200,000. Using 12% as the interest rate, I would need a total of 25,000,000 to reach this goal. If I invest 50,000 monthly it will take 41 years to get it to 25,000,000 but if I reinvest the interest, it will take 15 years to get to 25,000,000.

5. Protect your wealth.

Most of us want to create a legacy. Don't let all that hard work go to waste. Make sure to insure your self, your health and protect what you have created. You can have a lawyer guide you through setting up your own trust and estate planning.

All in all just start. Most of these become clearer when you start and you'll learn along the way. Don't go all in unless you have insights from a wealth manager/ financial advisor. Start small and build as time goes.