By Babajide Komolafe

The series on “You can invest”, which dove-tailed into the one on “Why you are not investing”, received interesting responses from readers.

These responses indicate interest for savings and investment, as well as concern about the investment options available in Nigeria among Nigerians. One common theme is the question about other types of investment besides shares and bonds etc. But before we address this, let us address another major reason why you may not be investing.

There are many people who know they need to save and invest, but they are scared of losing money in the process.

This fear is created and fuelled by stories of people who lost money in the process of investing either due to ignorance or failure in the financial system. There are examples of people who invested in bank deposit, only to learn that bank has collapsed or failed, and their money trapped. There are also those who lost money investing in shares. Many people lost money during the stock market crash of 2008/2009. Some also lost money invested in fake fund managers, Microfinance Banks, and mortgage banks or even finance houses. But while it is true that people lost money in the process of investing, it is also true that there are people who made money, and in fact did not lose any dime.

The reality and difference is recognizing that investment, like many aspects of life, is a risk. It involves risk; the possibility that something may happen that would hinder or undermine the achievement of the intended objectives.  Those who made money investing recognized this risk even before they invest.

So, the starting point for anybody that wants to invest is to recognize that the investment might fail and he may lose that money. This would induce an attitude of care and caution in your choice of what to invest in and who you should invest with.  Rather than make decisions based on sentiments, you would be guided by facts. According to the five basic laws of money stated in the book, The Richest Man in Babylon (by  George S. Clason), there are three major reasons why people lose money in investment.

The five laws are: Money comes to those who save; money multiples for those who invest; money stays with those who entrust it to wise people; money is lost when invested in things you are not familiar with; money is lost at a fast rate when invested in ‘Get rich quick’ schemes.

The next edition will dwell more on the last three laws. (To continued next week). Please send comments, questions to vanguardinvestors@gmail.com