9 things to consider before you make investment decisions

Knowledge is one of the bedrocks for success when it comes to investing. One of the best ways to avoid money mistakes is to start by asking yourself the right questions. Asking questions and honestly answering them before investing puts you in a better position to make smart investment decisions.

“Smart investment decision puts your money to work to achieve your financial goals”

Questions to ask yourself before making investment decisions.

Do I have a personal financial roadmap?
The first step to successful investing is figuring out your goals and risk tolerance. You can do this either on your own or with the help of a financial professional

Do I have an emergency fund?
Smart investors put 3-6 months of their income in liquid form to cover an emergency.

Have I paid off high interest credit card debt?
The wisest thing to do is to pay off high interest credit card debt as quickly as possible, this frees up cash that can be channeled towards investment.

Am I just following the crowd?
There is a new financial product on the block, everyone is buying. Are you jumping on board because everyone else is? Don’t.

Do I understand how and why this product will make money and am I convinced with that argument?
Make sure to understand the business model of the company so you can make better sense of the financial data

How long am I willing to lock the principal sum for?
If you are investing money and need to use it in the nearest future, you could be negatively impacted during a market downturn if you must sell your investment at a loss.

Do i have the time to manage my investment yourself?
A Do It Yourself approach in investing can take time. Before you start, consider how much time you can put into managing your investments.

Am I willing to make an investment plan and stick to it?
Create a plan you think can help you reach your goal over the period you have to invest and stick to it.

What do I want to invest in?
The investment options are numerous, Stocks, Bonds, Mutual funds, Cash Equivalent, Derivatives, Commodities, Real Estates etc.

You work very hard, and should be investing smartly, safely, and sensibly. Remember no question is a bad question. It is better safe than sorry.

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ABOUT THE AUTHOR

pfmAcademy is committed to helping young professionals become intentional about their finance through practical personal financial management tips.

Before I joined PFM Academy, I was just a classroom teacher and a lover of make-up. Like, if I were taken to a drugstore on a blank cheque, I will go for all the makeup items in that store. Then, one evening I had a 1-1 session with Tolu from PFM (we use to be church members during our childhood) and she asked how I was doing in my profession. I complained on how “Teachers take home, were unable to take them home here in Nigeria” she asked of my passion and encouraged that I could use that to start a ‘side blessing’ that’s what she tagged it. During the lock down I enrolled for a makeup course where I came out second best and boom! I began my side blessing after that. I makeup people for good money and yes, I still buy makeup products but this time, I buy for people and then make my profit. Thank you, Sis.