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Home FEATURED

COVID-19 Investment and Entrepreneurship

by Millycent Destiny Ndava
December 11, 2020
in FEATURED, ENTREPRENEURSHIP
Reading Time: 5min read
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investment and entrepreneurship

Civid-19 Investment policy

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By: Millycent Destiny Ndava

The COVID-19 pandemic has taught us a lot of things. One topic which I have heard so many times this past week is about investment. A lot has also happened in the Stock Markets across the world. This means we need to dig deeper to understand more about investment and the Stock Exchange. One thing which is obvious is what makes us wealthy is not how much we earn but how we can systematically use a proportion of the income we earn to build assets that pay us over time. Passive sources of income. Basically, there are four classes of investments.

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1.Stocks

These are for long term wealth. Invest in good companies that are undervalued. Research much about companies you want to invest in. What do you like about them as businesses? What are the fundamentals behind them? What are the growth prospects of the company in the current economic climate? Do they have any durable competitive advantage? Research on the companies past performance, historic price, dividend yields, and liquidity of the shares.

2.Money Market Instruments

These are short term securities like treasury bills or commercial paper. You can go through a broker, bank, or finance house. Treasury bills upcoming auctions are usually reported in national newspapers. The interest rate is not fixed but fluctuates based on market forces of demand and supply.

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3.Real Estate

This is a long term investment with medium risk, decent cash flows, and a reasonable expectation of an increase in value. This includes residential rental property, raw land, and commercial real estate. Know that property values may go up or down so it’s possible to lose some of your principles.Keep in mind that real estate is not a liquid investment.

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4.Mutual Funds

This is the pooling of funds by many investors for the purpose of investing in securities such as stocks, bonds, money market instruments, etc. Mutual funds are operated by money or fund managers who invest the funds’ capital and attempt to produce capital gains and income for the fund’s investors. Examples are Old Mutual, First Mutual, etc. This gives small investors access to a professionally managed diversified portfolio

Establish your investment goals

Why are you investing? Articulate what you want your money to do for you eg car, retirement, building assets. The reason why you are investing will determine what kind of investments you make. Write down your investment strategy to clearly articulate your thoughts eg

Putshu’s goal:Buy land

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Save 20% of salary deposited in savings account until $200 000 is saved

Take the $200 000 and split:$100 000 for fixed deposits and the other $100 000 for a stock portfolio.

Repeat until you reach target amount=$1.5m. Go and buy land.

Determine your risk profile

Always know this; you can’t have both low risk and high return. So there greater the risk, the greater the return. Nonetheless, not everyone is a high risk-taker. There are three classes of investors and we all fall in one of them.

1)Conservative investor

These preserve capital and reserve regular income. They have a low tolerance for risk. Such people should invest in debt or money market mutual funds.

2)Moderately Aggressive Investor

These take controlled risk for moderate returns. They must invest in a mix of balanced portfolios.

3)Aggressive Investor

They consider risk as an opportunity and leverage their experience and knowledge to take intelligent financial decisions. These should invest in growth and equity schemes.

Questions To Ask Your Broker

1)Investment Strategy

What is their asset allocation strategy?

What will they be investing your money in?

How diversified is the investment/fund/product?

What is the asset allocation mix/ratio?

2)Risk

Talk to them about how much risk you are willing to take on and if you are willing to lose a portion of your principal if need be.

3)Profitability

What are your expected returns on the investment?

Are the returns guaranteed or is there a possibility of a reduction if the market conditions change?

4)Liquidity

How much access do you have to the money invested?

Will there be penalties for premature liquidation of the investment?

5)Tenure

How long is your money locked for?

So to quote the words of Strive Masiiwa “You might earn a lot of money working as a professional somewhere,even in the Diaspora.You might even be a very successful businessman or woman,but if you dont know how to invest,the money will pass through you like a fast moving stream of water.”

Millycent Destiny Ndava is a Personal Dvt coach, Business coach, and consultant, speaker, author, and entrepreneur. She can be contacted on 0773465425 calls and App

Millycent Destiny Ndava

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