Investing is one method to accumulate monetary wealth for retirement, higher education, a home or merely financial security. Your financial health must be strong before you consider investing in anything because unforeseen circumstances can stop your monthly cash flow.

- Monthly income

If you do not have any investments, your monthly income is your only source for cash inflow. This means that, if you lose your job, you will have no money coming in to pay for rent, food and other necessary expenses. Before you start investing, save three to six months of salary to cover your expenses in times of need. For example, if you make approximately N300,000 per month, save N900,000 to N1.8m before you start buying investment products. This financial cushion might come in handy later on. (Note N2 = 1 Ksh)

- Debt

Neglecting your debts is quick way to lower your credit score and run into financial troubles. Saving money in a separate account to pay for debts prevents the possibility of late payments or default due to unforeseen circumstances. Before you invest, save enough money to cover at least six months of debt payments. Keep this account separate from your other savings account to budget your money more easily in times of need.

- Investment risk

The greater the return of an investment, the higher the risk. The level of risk you are willing to take with your investments should influence the amount of money you save before investing. For example, low-risk investment products such as bonds usually can be withdrawn if the investor needs the principle for an emergency. The money carries a very low risk of loss and is always there, so you can afford to save a little less. If you purchase stocks, however, you must prepare to possibly lose most of your investment to the ebb and flow of the stock market.

- Long-term plan

Some investment products require a minimum investment amount. Depending on your goals for investing, you may have to save a substantial amount to buy the investment product. For example, an aggressive mutual fund through a large brokerage might require a N500,000 initial portfolio investment. Research the investment products of different brokerage firms, consider the risks and benefits of their products and determine if you need to save any money to start a portfolio.

- Practice

In fact, like I always tell people, the only place where you have failure is in your own thinking. When you put anything into practice and you put your mind at it, you can always succeed.

“Nothing ventured, nothing gained! If you decide and put your mind at whatever you want to do, you can always make a success of it. But most people are always thinking of what becomes of me if I fail. When you fail start all over again!”