Why Invest?

Question 1

What is Investing?

Answer 1

The act of allocating resources (most of the time money) with an expectation of profit return.

Question 2

What is the difference between saving and investing?

Answer 2

When you save, you set aside money for future purchases. When you invest, you buy an asset with the goal of generating income

Question 3

Why Invest?

Answer 3

To beat inflation, and fill your need for money so your time goes for your passion

Question 4

What is compounding?

Answer 4

Increase in value due to accumulation of as time goes on. Applies to almost everything, not just money. Applies to effort, behavior, and learning.

Question 5

What should you do before you start investing?

Answer 5

• Improve your financial literacy

- Start saving up and have your own savings notebook.

Question 6

What could be the reason for not being able to invest?

Answer 6

• An expensive lifestyle
• Your current life situation; could be that you are the breadwinner of your family, or you have a sick family member etc.

Question 7

What is a sample way of segregating your finances?

Answer 7

Using the jar system:
Jar 1: Necessity:
- Essentials such as bills, food, gas etc.
- 55% of your savings
Jar 2: Emergency
- Your emergency fund for sudden needs.
- 10% of your savings
Jar 3: Leisure
- Your jar for rewarding yourself
- 10% of your savings
Jar 4: Education - Your jar for upgrading yourself
- Use it to buy books, courses, and other assets to learn new stuff
- 10% of your savings.
Jar 5: Investment - Your play jar
- This is where you get your trading capital.
- This must be something you are willing to lose.
- 10% of your savings
Jar 6: Give Jar
- Something you give back
- 5% of your savings.

Question 8

How do you plan your retirement?

Answer 8

• Identify the lifestyle you want to achieve when you grow old, and ensure it’s realistic based on your current situation
• Determine or draft your financial goals for the next 3 years, 5 years, 10 years, and 20 years.