Stop gambling with your finances

When you invest in what you don’t know, you are simply gambling aka ‘try your luck’. Growing up, I remember itinerant scam artists who staged road shows to attract the gullible, promising instant prizes for picking the right card. All you needed to do was to pay the ‘entry fee’ and then ‘try your luck’. The returns were instant but many went home without the money they left home with. Sadly, many people are still trying their luck. They don’t know what they are doing but still go ahead to do it, with the hope that the promised returns will materialize.

With the advent of the information age triggered by the coming of the internet, ignorance is no longer an excuse. If you can read and own a smartphone with data, you have a massive amount of information at your fingertips. With Google Translate, you can access information in major Nigerian languages. The issue is no longer a lack of information, but what to do with it.

Investigate before you invest

Before you invest, study to understand what you are doing. Do not outsource to others. If someone comes to you with an investment opportunity, insisting you make a decision on the spot, your answer should be a firm NO. You need to run it by your spouse, investigate and understand it properly, sleep on it and possibly speak to others who have done it successfully before you commit. It is true some opportunities cannot wait. If the opportunity meets you unprepared, that opportunity is not yours.

Don’t get carried away by promises of mouth-watering rewards to make a commitment on the spot. Don’t allow anyone to put you under pressure. It is your decision to make. Deadlines are meant to pressurize you to commit on the spot. If you do not meet the deadline, another ‘deadline will come’. More often than not, the deadline is extended with more discounts thrown in to sweeten the deal.

Do not allow yourself to be stampeded by the phrase ‘This is your last chance’. Another last chance will come, an even better one. It always does. If you miss one train, wait for the next. Life is a marathon, not a 100-meter dash.

Slow down and do your homework first. Follow the due process. Remain in the driver’s seat of your finances and ensure it works for you before you commit. If you do not have the money, simply let it pass. Don’t liquidate your zero-risk investment to move it into a high-risk investment. Each investment type has a role in your financial portfolio. Don’t allow yourself to be sweet-talked into doing something dumb, no matter how mouth-watering the proposition.

The latest act in town

Since the fall of Ponzi schemes, most notably MMM, cryptocurrencies seem to be the new act in town. Many seeking high returns are attracted by mouth-watering appreciation from investing in cryptocurrencies. There is nothing wrong with investing in cryptocurrencies. You just have to know what you are letting yourself into. Do your own research. Personally, I have some reservations about a currency system that allows anonymous transactions. It creates a platform for illegal financial transactions. It is a matter of time before law enforcement agencies and governments beam their search light on their operations. A key component of the war on terror is shutting down illicit financial flows.

Everything has advantages and disadvantages. So do cryptocurrencies. Investing in cryptocurrencies is not illegal neither is it a Ponzi scheme. This article is not about cryptocurrencies. It is simply reminding us to focus on investing in what we know, rather than following the trend. If you don’t know, invest time and resources in knowing. If you still don’t understand after that, it may be a signal that it is not yet time to go in. Just wait by the sidelines.

Greed for gain can land you in trouble

There is nothing wrong with seeking high returns. The more you know, the better returns you can get. However, if you keep violating fundamental principles in the quest for high returns, you ultimately have yourself to blame. Many who subscribed to Ponzi schemes have a story to tell. Some are willing to do it again – try to get in and get out before the house of cards comes tumbling down, again. That is a sad way to run your personal finances. Money gained that way hardly lasts because greed will bring you out of hiding one more time and you may likely lose what you thought you gained.

You cannot build an enduring financial structure on gambling. The house always wins. Rather than build an enduring structure brick upon brick, you want to take an escalator to the top. Slow and steady wins the race. When you are being driven by greed, common sense watches from afar off.  Very few lottery winners remain rich after the windfall. The money goes back to those who know how to handle it.

Becoming knowledgeable in any area is about making up your mind to set aside time to study to fully understand how it works. If it is important enough to you, you will set aside time and do what you need to do to learn. Don’t leave your future to chance or luck. Invest in knowing what you are doing, before you invest.

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