The essentials of intelligent investing to building a strong financial future

In participation of World Investor Week 2023 we’re sharing some of the essentials of intelligent investing.

Investing can be a powerful tool for securing your financial future, but it's crucial to approach it intelligently. Intelligent investors follow a set of principles and practices to make informed decisions and protect their hard-earned money. In this article, we will delve into the basics of intelligent investing, investor resilience in the face of economic challenges, and fraud prevention measures.

Basics of Investing

An intelligent investor:

• Recognizes the benefit of long-term, regular, and diversified investment.

• Plans for and invests according to his/her future needs and goals.

• Understands what he/she is putting the money into (“Look before you leap”).

• Recognizes the power of compound interest.

• Assesses the impact of fees when choosing an investment.

• Understands the benefit of long-term, risk-appropriate, diversified, and regular investing.

• Considers the impact of fees and the effect of compound interest – and always understands an investment before they make a decision.

Look before you leap - understand what you're putting your money into:

• Sometimes investors are attracted to higher returns and perceived lower risk.

• For some complex investments (e.g. structured notes, private placement, etc.) and for scams promoting higher return/low risk, the return shines brighter than the risk of losing money, so become very attractive.

Investor Resilience

An intelligent investor:

• Focuses on the impact of inflation on purchasing power and uses real rates of return to assess investment performance.

• Knows that a risk-appropriate, long-term, and diversified investment plan can help them navigate changing economic conditions and market fluctuations. They understand the impact of real rates of return, including the effects of inflation on different asset classes.

Frauds and Scams Prevention

An intelligent investor:

• Verifies that an investment professional is licensed.

• Researches investment opportunities independently before investing.

• Avoids "get rich quick" and "can't lose" schemes; if it looks too good to be true, it probably is.

• Distrust anyone who tries to pressure into making hurried investment decisions.

• Never feels rushed and ignores over-the-top sales pitches and pressure to invest right on the spot.

• Is suspicious of requests to wire money out of the country.

• Never discloses personal information on an unexpected call or other communication.

• Ensures the use of strong passwords and good data security practices such as two-factor authentication on accounts containing financial data.

• Is skeptical of unsolicited investment offers through social media.

• Verifies the source of any investment information found on the internet.

• Understands the importance of:

(i) verifying that an investment professional is licensed.

(ii) independent research.

(iii) avoiding “get rich quick” and “can’t lose” schemes

(iv) being wary of wiring money out of the country

(v) safeguarding personal information.

To find out how we can help you invest intelligently contact; info@waughmcdonald.co.ke