Thursday, July 25, 2024

Rhina Namsia: 5 things you need to understand before investing in anything

Rhina Namsia, the founder of The Acemt Consulting, a training and consultation company that provides financial planning and investment advisory.

1). Risk

This is the ability for you as an individual to know if you’re capable of handling the risk that comes with a certain investment. For instance one person can be able to withstand losing 100k whereas for another, losing that can render you bankrupt since it’s all you have or been saving up your entire time hence need to choose wisely.

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Still under Risk, get to know your willingness/tolerance to loose a certain amount. Even if you can afford to lose 100k, how do you react when it happens, are you one that can go into a big shock and faint instantly or will affect you for a long time mentally? Check on that

2). Liquidity

This is the easiness that comes with accessing your money whenever you need it. Different investments have different liquidities because of how they are structured and their underlying assets.


Investments such as houses and land can take time to liquidate. Treasury bonds can vary depending on many other factors of the market, T-bills are short term but can only be liquidated after maturity. Money markets can be accessed between 24-48 hours of request.

But how do you choose? Understand your liquidity needs, that is school fees, rent, other investments in the short term, emergencies etc. These will inform if you will need the money you want to invest in the short or long term. Wont make any investment/financial sense if you buy say T-bonds and you want your money back in 6 months

3). Time horizon


Are you looking to invest or save for long term needs or short term ones. For instance, if you want to save for your child’s college fees, it will be prudent to put that money away with that longevity in mind, same to short term. Some assets such as property or houses are best for long term horizon and not when you want quick returns.

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4). Returns

What kind of returns are you looking forward to in terms of figures and characteristics. Different assets offer different kinds of returns with different tax measures applicable. From dividends, profits, rental income, coupons, interests, commissions etc Understand each of it verses what you’re expecting and align yourself

5). Goals

This is the most forgettable thing when investing. It is the first step you should have in mind before all the above.

If you have your goals in mind, they will guide where and how you’re going to invest your money. Your goals as I always will come from your values and principles as a person. One person is all about capital preservation whereas another one wants to explore and double theirs in a year, 2 or so.

These two people will have to pick different asset classes for their capital. Another one may want a mix of both in different ratios. So understand your values, then curate your goals and it will be easy to pick investment vehicles. Every investment approach should be unique to an individual since we are all not the same

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