There may never be a universally perfect time to invest, but that does not mean every investment is suitable or that you should rush into one. Before investing, consider your emergency savings, expensive debt, financial goals, time horizon, and ability to tolerate losses. The useful lesson is to avoid endless procrastination after you understand an investment and have decided that it fits your circumstances. It is not a reason to invest simply because you are afraid of missing out.
Oftentimes, we are fond of making the following statements:
- I'll start investing when I have a certain amount.
- I'll start investing when the economy is good.
- I'll start investing when I am at a particular age, etc
The Perfect Time is a Myth That Will Never Arrive.
You do not need to know everything about financial markets before you begin learning to invest, but responsible investing still requires preparation. Before committing money, understand what you are buying, how the investment is expected to generate returns, the fees involved, how easily you can withdraw or sell, who manages or regulates it, and what circumstances could cause you to lose money. If you cannot explain the investment and its main risks in simple terms, that is a reason to keep researching rather than a reason to rush.
Taking action can be useful once you are financially prepared and adequately informed. Acting quickly simply because other people appear to be making money is different from making an informed investment decision.
Why Starting Earlier Can Matter
One reason people discuss starting early is compound growth. Compounding happens when returns generated by an investment are reinvested and can potentially generate additional returns over time. Imagine two people who invest the same amount every month into the same diversified investment. Assume, only for illustration, that both receive the same average return and pay similar fees. If one person starts ten years earlier and both continue until the same age, the earlier investor generally has more time for compounding to affect the value of the investment.
However, this is only an illustration. Real investments do not produce a guaranteed return every year. Returns can be lower than expected or negative, and fees, taxes, contribution amounts and investment choices can materially change the final outcome. The lesson is therefore not that starting early guarantees wealth. It is that time can be useful when combined with appropriate investments, consistency, diversification, and sensible risk management.
2 Major Reasons Why People Are Not Investing Yet
1. Fear of Losing: Fear of losing money is one reason some people postpone investing. That fear is understandable because every investment involves some level of risk. The solution is not to ignore risk or invest blindly. It is to understand what you are investing in, consider your risk tolerance, diversify where appropriate and avoid investing money you cannot afford to lose.
2. Big Investment or Nothing: Some people don't invest because they want to invest a big amount of money or put in a large amount of resources when it comes to investment.
This is where they are getting it wrong. Waiting to invest a huge amount of resources might never come. How about you invest with those small and consistent amounts, which will compound over time even when you are not looking.
What You Actually Lose When You Wait
There is nothing wrong with taking your time to understand an investment before putting your money into it. In fact, I believe research should come before investing. But there is a difference between being careful and being permanently afraid. If you spend years waiting until everything looks perfect, you may never begin. Markets will always have uncertainty. There will always be another economic problem, another market prediction, and another reason to wait. The goal isn't to eliminate every risk. The goal is to understand the risk and decide whether the investment is appropriate for your goals and circumstances.
How to start investing
1. Start with what you have:
Depending on your circumstances, there may be investment options that allow you to begin with relatively small amounts.
2. Save Before You Start Spending:
Whenever you receive your salary, the first thing is to transfer a reasonable amount of money to another account for saving. Ensure you lock the money so you won't be tempted to touch it when life pressures you to do so, or perhaps save it in a bank account that you don't have the Atm and also ensure the bank is very far from where you stay. This will prevent you from touching the money unnecessarily except in an emergency.
3. Keep Your Setup Simple, but Diversify Appropriately:
A beginner may find it easier to learn how one reputable and appropriately regulated brokerage or investment platform works before opening accounts everywhere.
However, using one platform should not mean putting all your money into one company, one stock or one asset. Diversification means spreading exposure across suitable investments instead of depending entirely on the performance of one investment. The appropriate mix depends on your financial goals, time horizon, and risk tolerance.
4. If You Feel Afraid, Understand Why Before Investing:
Fear is not evidence that an investment is good or bad. If you do not understand how an investment works, cannot explain its major risks, or would be financially harmed if the money lost value, stop and investigate further before investing. Do not use emergency money or borrowed money simply because you are afraid of missing an opportunity.
If the investment decision is beyond your experience, consider learning more or seeking guidance from a qualified professional before committing funds.
What I Learned About Starting
I eventually realised that investing doesn't mean putting all your money into one opportunity. It doesn't mean borrowing money to invest. It doesn't mean investing your emergency money. And it certainly doesn't mean following somebody on social media because they promised quick profits. The first step is understanding your finances. Then understand the investment. Understand the possible return. Understand the risks. Understand how long you intend to stay invested.
The Securities and Exchange Commission of Nigeria advises investors to understand their goals and risk tolerance, research investments, and consider diversification. [SEC Nigeria — Investor Education](https://home.sec.gov.ng/our-mandate/development/investor-education/investment-strategies/tips-to-investing-wisely-in-the-nigerian-capital-markets/)
Conclusion
You do not need to predict the perfect day to enter a market. A more responsible approach is to build an emergency buffer, address unaffordable debt, define your financial goals, understand your risk tolerance, and research appropriate investment options.
Starting earlier can give long-term investments more time to compound, but returns are never guaranteed. Investments can rise or fall in value, and some investments can result in loss of capital. Invest only money that is appropriate for your circumstances, understand what you are buying and diversify where appropriate. The goal should not be to invest as quickly as possible. The goal should be to make informed financial decisions that you can sustain over time.
Disclaimer: This article is for general educational purposes only and is not personalised investment advice. Investment products involve risk, including possible loss of capital. Before sending money, verify investment providers and regulated market operators with the appropriate Nigerian regulatory authorities or those in your region and country. Thank you.
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