Personal investing is one of the most important aspects of personal finance. It focuses basically on the overall investing activities undertaken by an individual. In this case, the investing efforts of the individual are carried out with a plan for creating a financially secure future.
What is Personal Investment?
According to the personal investment website, a personal investment includes the money, funds or assets that an individual (rather than a company or group of people) invests in something. It focuses on the idea of knowing how you should be managing your money and maximising the impact and growth of every naira you earn.
Getting started on personal investing can seem like a lot at first due to the broad scope of the term. To get started, you need to identify the types of investments, your investment plan, how much you want to invest, what you plan to achieve with such investment and a whole lot of factors that need to be considered before you get started. If you are new to personal investment, this article will serve as a guide to your investment journey. For a start, we will discuss the various types of personal investments and how to choose a plan suitable for you.
Types of Personal Investments
Personal investment comes in different forms. To some, it might be a retirement savings account, while it appears as a real estate acquisition to some. However, to choose from these personal investment plans, prospective investors must explore options that appeal to them, the risk associated with each type and the level of return on each investment.
- Bank Savings
Nothing seems more pleasing to the ears than a fat bank account. Bank savings, the money market and the stock exchange are among the list of common personal investments around today. The returns generated from bank savings are interest rates, popularly called compound interest. Although interests from savings accounts are one of the lowest, they are useful in time of emergencies. While the savings account offers little interest rates, the money market offers a slightly higher interest rate but with more restrictions.
- Securities and Commodities
Securities and commodities are personal investments that are used to fund retirement accounts or savings account. Securities include bonds, stock and mutual funds while commodities offer future contracts for precious items.
This type of investment comes with more risks due to market fluctuation. Since it deals with stocks and currencies and all of these are subject to rise and fall with exchange risks. The Nigerian Stock Exchange provides a current list of stocks and investment options.
- Real Estate / Properties
A recent report by Forbes put the number of homes sold in a pandemic stricken year 2020 at 6 million with a five per cent increase on the average home price. In Nigeria, the total value of the real estate market is N59 trillion with a growth outlook in 2021.
Real estate investment is one of the best types of investments available. Although prices do fluctuate and it is difficult to liquidate at certain instances, it, however, offers equity ownership over time. Landed properties are known to appreciate with time due to certain financial and physical factors giving owners more returns on their properties. Real estate is either purchased for supplementary investment purposes or as a means of joining the ever-growing real estate market.
Starting a personal investment journey comes with a lot of steps and specific strategies. The next part of this article will serve as a guide for beginners on how to start personal investing.