Winsome Stewart, Contributor
Every day, we make numerous decisions concerning every aspect of our daily lives. These decisions are usually influenced either by our families, the advertising media, or our culture. The same is true when making investment decisions.
There are three major factors that play an important role in why, how and where, we invest.
Wyhy?
First, there is the family, who sometimes greatly influence investment decisions, be it either by the husband, wife or children. By functioning as a cohesive unit, family members take on various roles such as the influencers who seek information on the various investments companies and products available in the market.
Second, you have the advertising media. Making an investment decision requires research and it's vital that one gets the right information. Investment houses use the advertising media whether through print or electronically to provide information about their products and services. Advertising media in this situation plays the role of the influencer, by attractively packaging what the company has to offer it is their aim to persuade investors to patronise them. The media provides choices as well as useful, prudent and relevant information that facilitate the decision process.
How
Culture is the third major factor that influences the investment decision. No two families are alike. The culture of a family, like any other cultural system, consists of the beliefs, values, attitudes, norms and behaviours of its members. Each family history affects its current culture, individual family members influence each other in countless ways. It is important for parents to instil the values of accountability and responsibility in their children as it relates to the practice of investing. Indeed doing so can be critical in securing a sound financial future.
The sooner you start to invest the more it can increase over time. Planning for your future and determining your goals early will make it easier to achieve those goals.
Where
Investing will be more successful if you have specific goals in mind. Short term goals are those to be reached within a year or less, for example, paying off a credit card debt, or to pay school fees. Medium term goals are those that can be reached in one to five years, such as renovating your home, which requires more planning and careful estimation of costs.
Long term goals are those to be achieved in more than five years, sometimes over a lifetime. These may include the purchase of a house, sending children to university, starting a retirement fund or a business. Choosing the right type of investment can be critical in achieving medium to long term goals.
Short and medium term goals can often help you in attaining a long term goal. For example, you may decide to invest an amount each month over a period of one to five years in order to make the down payment on a house.
Winsome Stewart is a
personal financial advisor at Guardian Asset Management Limited.
