Are You Ready to Invest? Things to Consider Before Investing Money

Jan 26, 2021

In an era when money is continually being stretched, most people keep searching for viable ways to derive extra funds, while some consider venturing into a financial investment. Whether you are a breadwinner struggling to pay multiple bills, or a business owner seeking to expand or choose the hassle-free way of investing money, there are several options.

Among the foremost things to consider before making an investment decision is whether or not you are financially fit. Besides that, are you up for the risks? Will you be able to spot red flags like scam artists? Is it the right time to make a financial investment, and do you have the time and knowledge before proceeding to make an investment?

There are various investment options, but before anything else, you need to have a clear purpose or direction. Some people want to make moderate gains for goals like buying an additional car, while other prefer huge gains that come with high risks.

For most, determining the best use for their money is vital. They devote time checking out investments info and reliable entities to partner with. Finding trustworthy sources of funds outside one’s circle of family and friends can have payoffs. They can aid not only in coming up with much-needed contingency funds, but also offer peace of mind.

Not all lending companies or individuals, though, have a savory reputation. Keen investors or borrowers strive to sort out the good ones from the bad.  Track record of experience helps, and so do positive testimonials or a roster of satisfied clients.

The best ideas are already out there. If you happen to be among those cash-strapped startup business owners left with some fight in you, turning to a qualified lending specialist may help. The first thing you need to do is know more about the organization. Sound financial planning can allow business owners to sleep peacefully even during challenging times.

Look before you leap

From the get go, every would-be investor should have more than enough capital to kickstart and keep a business going. There may be circumstances, however, that can affect company cash flow, prompting a business owner to borrow.

Here are two important things to consider to save yourself from unneeded stress when stretching your finances and looking to avail of the products and services of a lending firm. First, know all there is to know about a company and its core product before you make an investment. There may be much buzz about a product, but limited knowledge about it yet plunging to invest in it can spell problems.

From an investor’s perspective, knowing much about the company management – whether it prioritizes long-term value creation, whether it puts customers first, and so on, can be crucial. In the book, “Built to Last: Successful Habits of Visionary Companies,” most visionary companies are noted to view their products and services as making useful and important contributions to customers’ lives.

Generally, shrewd investors are known to gravitate towards products that show much promise of making gains. If an investment is considered “volatile,” it means it is unpredictable and chances are, it may not be expected to last long. A financial investment that has attracted numerous people in recent years is cryptocurrency. Bitcoins, for example, have delivered extraordinary returns certain investors, yet issues of security and resilience continue to be threshed out. 

Pondering on the question, “What should I invest in?” can lead to an array of options. Sticking to the rule ‘never to invest in something you do not understand’ can prevent loss of time and other resources. Lots of startup businesses have fallen by the wayside simply because this rule was not followed.

American business tycoon-cum-philanthropist Warren Buffet once shared, “Simply do not go full-on and trust a single game plan when investing in anything.”  In other words, do not put all your eggs in one basket, or diversify.  That is the second key factor to consider when investing money.

Before investing, ensure that you have a fallback mechanism or contingency plan, in case price swings or economic fluctuations occur and cause a business downswing. When choosing an investment, you should consider risk. There will always be the risk factor when weighing options on how to start investing.

Marcelo Apidos, a Filipino father of four who ventured into running a pharmacy outside the Philippines’ national capital region, shared his takeways on how to begin investing. “In investing, I think it is important to put money only in businesses or investments that I fully understand. Also, I invest only what I can manage to lose,” he said.

Online solutions to the rescue

The pandemic has ushered several new developments. Online solutions have become the norm.

Food and apparel retailing, medical consultations, payment apps, and financial exchange platforms for both lenders and borrowers are but some of the things that have gained widespread use. Going the online route has clear advantages, if you choose well and get good and reliable customer service.

P2P lending platforms come of age

To ease the anxiety of individuals needing a small loanable amount, and to meet the requirements of investors who want to reinvest their earnings, online financial investment options such as peer-to-peer lending platforms have generated their share of attention.

Borrowers, such as individuals bent on setting up or funding an existing franchise, or need extra cash to pay off bills, can easily sign up in an online peer-to-peer lending platform.  Signing up and submitting the necessary documentary requirements, then awaiting the credit check and finally, the funding confirmation and disbursement, can be a breeze.

Besides being easier and more convenient than applying for a loan in a bank, peer-to-peer lenders, such as, take measures to maintain data security, quashing worries about personal details being leaked. Once the loan request is in the P2P lending platform, lenders are able to see which profiles suit them.  For those who are ready to make an investment, the advantages include:

  • Convenience of online investing
  • Low minimum investment
  • Full control of funds, as well as transparency
  • Monthly returns

Borrowers who take the P2P lending route generally reap:

  • Hassle-free application process and quick feedback
  • Fixed monthly repayments
  • Flexible interest rate
  • No hidden fees

Both borrowers and investors can ensure that they make the most of, or preserve, their gains by being disciplined with their finances. Practicing the habit of saving and allotting funds for the important things that need attention will contribute to financial freedom and growth later on.

Before anything else, though, one needs to be in the know when it comes to choosing the companies to transact business with. When investing money, it is best to choose partner-companies with competent and honest management. Sufficient knowledge will lay a solid groundwork when thinking how to start investing.