Here’s a question I get all the time, Khalila. What stock should I invest in? Those of you who’ve been following me for a while already know what I’m gonna say. I’m not a licensed financial advisor. I can’t answer that question. Legally, I’m not allowed to. And in fact, even if it wasn’t against the law, I probably still wouldn’t do it.
First of all, I don’t want that burden. There’s always a risk involved in any investment. And if things don’t go the way I might expect, I don’t need any of you coming back to blame me for you losing money.
Now some of you try to get around the question by saying, well, just tell me what you invest in so that you can go out and just pick the same thing.
Bad idea. You have no idea what thought processes went into my picks. Suppose I literally just did any minimo and just got lucky, there’s no guarantee my strategy will work for you and the results that you’re looking for.
Investing is a very personal thing. Your goals are likely to be completely different from mine, and your risk tolerance might not be the same either. Right now, my husband and I are investing with specific medium to long term goals in mind. So our investment strategy is centered around that timeline. We’re investing in things that we think will give us a good return in about two to five years, and we have some other goals along the way, too, that are personal and specific to our needs. We may have picks in there that don’t earn us anything for several months or even make a loss in the short term, but we’re confident we’ll show us a significant return in our timeline.
Now what are your goals? What are your timelines? I know some people who invest solely for retirement, which may be 20,30 years away. They’ll have a totally different strategy than me. I know others who are serial flippers, meaning they’re only in it for the very short term, a quick profit. And they invest, like for example, heavily in ipos and then sell in a few days. Nothing wrong with that either.
Your goal may be to fund a summer vacation to Europe, so you have about six months until summer to make enough money from your investments to fully pay for the trip.
So these are the types of questions that are licensed financial advisor will ask you before for making recommendations. Investing is not one size fits all. And advisor will also ask about your risk tolerance. You can classify yourself as high, medium, or low risk. If you’re the type of person who likes to play it safe, you’re very conservative, you may want to consider unit trusts or other types of managed funds. There’s stuff like Sagicor Select 1, which allows you to invest in several different stocks in a particular category at once. If your risk tolerance is very high, then IPO flipping may be for you. It’s risky. You don’t know if you’ll get back your money in the few days that you may need it back, but you like living on the edge and reaping that big reward the times that it does work.
So these are some of the things that you need to consider before you start investing. Why am I investing? And don’t simply say to make money. Everybody wants to make money.
Have some specific goals in mind. Are you trying to accumulate enough money for a down payment on a house? If so, how much? Put a dollar figure behind it. How much do you need and by when this becomes your goal, if you’re doing it for retirement, you can still calculate how much you need to live and therefore, how much of a return you need to generate every year. Having a goal in mind will help to guide you if you choose something with a two year timeframe in mind, you’re less likely to panic sell if the price suddenly dips this week.
And then the other thing, like I said is knowing your risk tolerance, which may change with time. You may start out very conservative because if you like, you don’t really know what you’re doing. But as time passes and you become more confident, you’re willing to take more risk in anticipation of higher reward.
So there’s an entire conversation that goes into recommending stuff box. And it’s something that I can’t do without knowing you personally and knowing these things about you. No, I’m not interested in becoming a licensed financial advisor. My interest is in sharing information for a broad audience. And there are not many people who do what I do, but there are so many other people who are licensed to give you personal advice. And my advice would be to seek them out. Usually once you open an account with a particular firm, they’ll assign one to you for free. That’s part of the service that they’re offering to you for your business.