By Godfrey Kenneth Gobba
Over the years I have interacted with hundreds of people that come to me for help with their investments and I have come to notice a consistent pattern of thought.
Almost everyone I meet that has not yet started consistently investing their savings is waiting for some magical amount of money or some mystical event to kick start them into “investing”.
In most cases, we do not think it is possible or we are simply not aware of how we can invest our small amounts of money.
Many times we are often embarrassed to even think of investing money as little as Shs100, 000.
So the most obvious course of action for us is to keep on accumulating our little stash of savings bit by bit until we finally have an amount of money that we are psychologically and emotionally comfortable investing. What most of us do is to keep on building up a savings account until we feel it is big enough to be converted into an “investment” of some sort.
Now this is a problem. It is a flawed concept and a disease that is killing not only individuals, but even investment clubs.
When you manage your money this way, you are like the builder who only has 2000 bricks readily available, but they refuse to even dig out the foundation or to even lay the first brick until they accumulate all the 50,000 bricks they need to complete the entire house.
So they keep piling up the bricks until they have the 50,000 they think they need to start building.
That house may either never get built or it might take much longer to finish it than if the builder had simply started with the 2000 bricks that were readily available.
Likewise, if you manage your money using the same flawed concept, you might never acquire any investments to your name and you might elongate your years of financial struggle.
But it doesn’t have to be this way. You don’t have to keep building up your savings account until it is big enough to invest.
You can start building your investment portfolio brick by brick until you eventually have a state of the art mansion.
There needs to be a change in your thinking. Instead of struggling to build up your savings bit by bit, you should now focus on building up your investment portfolio bit by bit.
If you used to “save” Shs100, 000 a month, now you need to “invest” that same amount each month.
The difference is that while “the saving” parks all your bricks in a pile until you acquire the magical number of bricks you need to start building, “the investing” puts the small number of bricks you already have available to use and you start building your mansion right away, brick by brick.
As a result, while the “saver” might take 30 years to complete that house, the “investor”, using the same amount of capital, could complete it in 10 years, thanks to investment returns that keep on compounding.
You should not feel embarrassed about investing that small amount of money that you “stash away” each month. That small brick you keep stashing away can bring your house one brick closer to completion.
That small Shs100, 000 a month that you feel embarrassed about can easily be invested in stocks, bonds, unit trusts, REITS etc. You just need to know how to do it and perhaps know who can help you do it correctly.
With the right investment strategy, no amount of money is too small to be invested.
The author is CEO, African Investor Academy