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Michael Olafusi

Why I Invest In Stocks

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I invest in stocks because I thoroughly understand them. I do my own stock analysis (I even built this tool and this one too to help others with their own stock analysis); I teach financial modelling; I do projects for investment houses (currently working on a VaR, value at risk, model for a foreign investment corporate client); I have made enough mistakes over the last ten years that I now recognize the common pitfalls and what works. Most importantly, investing in stocks is a vital component of any very sound personal financial investment plan.


Many of us work hard daily. Even after spending the first two decades of our lives in school and are now working full-time, many of us still do Masters, Ph.D and professional courses. We are constantly developing ourselves in order to increase our earning power. And some of us succeed very well. You now earn enough to cater for all your needs and those of your dependants with still some money left. And this is where many of us fail to do things right.


When you don't have a sound financial investment plan, other people's plans look good to you. You will easily fall for the real estate salesman's talk about buying properties. You will feel left out when your friends are doubling their money in the latest investment scheme. Even the FGN savings bond will look heaven-sent to you. No matter how strong-willed you are, you will always be facing immense pressure as no financial investment plan is like a vacuum and difficult to keep that way. One day, you will break and go for one of the investment schemes you see your friends doing. And more often than not, you will get burnt and swear off any form of investment. Then the vacuum-struggle cycle restarts. 


I would advice that you rather fix the issue properly and permanently. Learn about proper financial investment. Take baby steps to practice doing the right thing. You will make mistakes but when you start the right way your mistakes won't be of the sorts that bring you down.


I started with mutual funds, having professional investment managers do the bulk of my financial investment for me. Then I slowly started investing directly in stocks myself, the proper way. Before then, I got burned in the 2008 crash when there were radio jingles, billboards and TV adverts on buying stocks and every listed company was doing a public offer. I still remember the First Bank advert of their public offer at N31/share. My dad got charcoals from it, everything he put in completely burnt. I lost all I put in Mutual Benefits Assurance (minus the dividends they gave me in 2008) and Finbank. So I was much more careful to do things right and learn the proper way of investing. From 2011 to now, I have gained a lot of practical experience in managing my own financial investments. I have seen my money go up and down over the years. At first, I used to feel sick when I see it go down (especially just after I put in my money) but now I am very much used to it and see buying opportunities during market downs. 


I am following the get rich slowly mantra. I have my own investment plan and it excludes any get rich quickly scheme. All the double your money in two months or in one year schemes have no appeal to me. No amount of real world evidence of how well your real estate or bitcoin or XYZ scheme is doing can entice me. Not that I don't believe they work but because I have my own solid plans that I am executing religiously. If they work for you, great. Mine also works for me, though less impressively but I am contented. 


I simply work hard at my profession (data analysis) and invest the excess funds I have in the stock and bonds market. I also keep enough to cover my four months living expense in a high yield cash account (savings account) for emergency needs. I do both Nigerian stocks and US stocks. Same with bonds. I totally understand them. I don't panic. I have more peace of mind seeing my money work for me in those investments than having them lay temptingly in my bank account.

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