The word investment means a lot of things to different people. To a fashionista it’s buying that pair of shoes that looks good with anything and to a car collector it’s getting that rare car in their collection. At the end of the day an investment as we defined in the previous article is money spent on something today that can give you value in the future.
Before investing money there are critical questions one should ask :
- What is the purpose for investing this money?
- Is it for a long period i.e for retirement or a short period i.e to buy a car?
- How much risk am I willing to take?
- Do I want to take a high risk or play it safe?
- Do I want to put all my money in one basket or do I want to spread it in different things?
- How much can I invest ?
Once one has answered these questions one can consider the form of investment to take . There are simple investments that can be done with small amounts and limited know how and more complex investments that require help from an expert. We will examine some of these.
- Buying livestock
This is commonly done by rural folk there is great wisdom behind it. One can purchase roadrunners , goats or a cow and leave these to reproduce in time these will multiply and these have a minimal cost of upkeep. One can earn a profit from selling off the offspring of the livestock. There is a risk of losing the livestock due to theft or disease.
- Lending clubs
A group of people can contribute money and lend it out with interest to group members or relatives .At the end of the year the profits can be shared and the initial amount reinvested.
This can be risky as people can default.
- Purchasing an asset and leasing it out
This can be a car , generator, house etc. One will earn a rental from each asset on a monthly basis from the person leasing the item. This is a safe method but requires a big amount to start out. One earns what is called latent income i.e you make money whilst you sleep. Warren Buffet made money from renting out pinball machines as his first business.
- Becoming a collector
One can invest in buying rare coins, painting , items and keeping them as they will appreciate in value. For example an autographed book by Nelson Mandela can fetch millions now but did not have as much value in the 90s.
- Buying shares on the stock market
This requires expert knowledge and one has to be willing to make a long term investment to reap the full rewards.
- Investing in the money market
This involves giving your money to a bank or finance house for a certain period at an agreed upon interest rate. This is a short term investment and the larger the amount the more one is likely to earn.
These are just some of the ways one can invest money. In every decision made it is critical to do thorough research and seek advice from those who have followed an avenue you want to pursue. Happy investing .