- Paying Themselves First Principle of Saving: When we are first beginning to earn either a salary or income, most of us either do not have an idea or have never understood the fact that much of that portion belongs to other people / entity besides ourselves. The Landlord of that apartment, the electricity bill, the school fees etc. Most of us therefore are caught up with believing that the money is not enough to save up when we are faced with all these obligations. However smart investors know the principle of paying themselves first with a recommendation of at least 10% of the total income before paying out to any other entity. That way they are able to build an egg nest of investment.
- Tracking Expenses: You are walking on your way to work and buy sweets for 10 shillings, that doesn’t make much of a difference you tell yourself. You are walking back home and find a nice shirt/ blouse and buy it. In the middle of the month you cannot do the math! The challenge is, most of the places we spend our money in are impulsive. If we take only one month to track our expenses we can well identify where the loopholes are or unnecessary spending. This becomes the solution to our next item.
- Budgeting: When we are aware of our spending, we can work well by creating a budget before spending. Having a monthly budget by prioritizing the basics like housing, food and transport helps us from getting into serial financial agony and over borrowing. Through Budgeting one can come up with an extra emergency fund from good money management to cushion from falling into financial depression.
- Good Debt Vs Bad Debt: There is good debt and bad debt, something that most of us hardly consider when committing to debt. Debt meant for consumption without an expectation of any notable gain is a bad debt. Debt that brings about growth up and above the debt amount plus interest is good debt. Being conscious of this while deciding to commit to debt will help you make a logic decision in regards to whether what you are commiting the debt for is something you need or they are just wants that can be satisfied through other means like saving for it other than debt.
- Time Factor: Investors now know that, time is the greatest of assets one can have. Most potential investors wait until they are ‘ financially sound’ to take the first step to start The good news is that, you don’t have to be a Millionare to start investing more so saving doesn’t necessarily equal to investing.
- Saving vs investing: Most potential investors save believing that it makes them investors. Saving is good if it is directed towards the goal of growing what is saved contrary to the desire to hoard money not to lack. The Mentality of hoarding comes from a scarcity mindset that if I do not keep I will not have. However investing means releasing the seed to a multiplication company to grow and multiply it.
- Herd Mentality: As an illustration, this is the behavior many have of following the masses in the market. Smart investment requires proper knowledge of what to invest in and the concideration of the sustainability of the invested venture. Good investment is the ability to filter the Market Noise. Investors buy the Romours and sell the News; buys the dip and sells the spike.
- Buy and Hold: This is a concept that many retail traders have and for this reason, they are stuck at the stock market. They buy shares and wait to trade the same when the prices move upwards. However there is a difference between this type of trading and real investing. An investor operates on the day to day movement of the stocks in the market. They know when to enter the market, accumulate or exit by constantly following the trends of the market. There is danger in buying and holding shares without constant or active participation of knowing how the markets are working.
Gold Avenue Africa, through the Gold Finance Academy ( Class of investors & Golden Circle Events) drives the mandate of Financial Literacy. To bring investors and potential investors to a place of financial intelligence.
Through the class of investors, different topics from Money mindset, investor mindset, ecosystem of investment and many more are covered.
To learn more of our financial literacy mandate kindly follow this link: http://goldavenueafrica.com/financial-literacy/
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