4 months ago
In fact, there is a misconception about ‘investment’— is that a big fat money in your bank account while just getting started. However, the true fact is that the process of building a strong investment can begin with a few dollars or pennies. Yes, it is, indeed. At 11 years old Warren Buffett, for example, bought his first stock at a cost of $38 per share. So, my simple logic is that there are no age limits as well as how much money you will be investing in the stock market or elsewhere for investment. On top of that, however, an early investment can make a lot of sense because your money has enough time to grow into a substantial surplus fund that will serve you well in times of need.
Like it or not, but investing just once a year or occasionally is not enough. For your money to grow well, you need to invest a stipulated amount on a daily basis. On the one hand, maintaining this financial discipline is paramount if you wish to reach your financial goals in the end. Most importantly, on the other hand, systematic investment plans (SIPs) and auto-payment options are some of the best options to scrutinize this practice when it comes to investing.
It is not hyperbolic to say that time is one of the biggest assets for an investor. And, it is wise to use it for financial gains, too. When trying to build wealth, it is not enough to just invest and earn returns and spend that money. Meanwhile, reinvesting the interest yielded could generate larger sums of money over a period of time. Having said that, the more you reinvest, the more you build a robust financial portfolio. Here it is relevant to quote Albert Einstein, “Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.”
Similarly, we’ve often heard about diversifying portfolios, right? Diversifying your investments can help a lot with risk management and avert financial losses in case of a volatile market. The economic instability caused by the Covid-19 pandemic gives us one of the best examples ever before. To be more specific, investors who had concentrated their money into one kind of stock faced heavy losses during this Covid-19, as opposed to those who rather diversified their portfolios. After all, it is always advisable to diversify your investments into different asset classes, namely banking, finance, hotel & tourism, hydropower, investment, insurance, microfinance, mutual fund and the list goes on. In the context of Nepali capital market, one should also mindfully think about various sorts of asset classes rather than investing only one classes.
By and large, by doing all of these little disciplines, when combined together can form a healthy financial management system to hold you in good position in the future. And lastly, above all, I’d like to conclude this piece by saying that, “Patience is your virtue, no matter which area you want to be in life”