How to make wise investment decisions

Francis Muli @PeopleDailyKE

If you want to take a shot at becoming wealthy, experts say, you need to do more than just earn money. Once earned, you will need to grow the money. To do this, you need to learn how to invest.

However, every time, for instance, one visits social media groups concerning finances, so many people appear to be at loss on what type of investments they can put their money in.

The amount of money involved might range from a few thousands to millions of shillings.

For lack of good choice, many before find themselves losing their hard-earned cash to scammers who come in the name of investment experts.

Therefore, before deciding to invest, one should evaluate their ability to take on risks. Investing is taking a risk, as you could make profits or losses.

However, driven by the appetite to create more wealth, people forget that losing is part of any investment, so when they lose money they become emotionally unstable and even lose their main source of income. If you cannot afford to lose the money, do not invest it.

It is at this time that you draw your financial roadmap, evaluating where you are and where you would like to be at a certain period of time.

Look at the viability of the projects, and alternatives. Make calculations on how you will reach your destinations, before jumping into any conclusion.

Check the exit plans available for the investment plan, so that you are not locked into a loss-making investment plan.

Most important, choose an investment that you have basic knowledge in, so that you are not in total darkness just waiting for money from your investment without knowing what happens.

If you come to a conclusion that you are ready to invest, it is also important to consider an appropriate mix of investments that suit your financial muscle.

Make comparisons, look at the gains and risks involved then make a choice. You could buy shares from a profit-making company, buy property and wait for prices to appreciate, bonds and so many others.

In the middle of the transaction or investment, evaluate your progress against your set timelines. If it is not going according to plan, seek the exit plans mentioned earlier stated. The exit plan should be favourable both for you as an investor and the firm you have invested in.

If you are doing an individual business, look for a way to fold it up, that you will recover better part of the money you invested, if not all.

Also, create and maintain an emergency fund even as you invest. Some investments might not allow you to withdraw cash in the middle of the project, so you need to have an alternative source of income to fund your daily life.

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