As a passenger in a car, you may not be aware of the route being taken or what is happening on the road. That is because someone else was doing the hard work. The driver had to know the road or at the very least find out how to get there. Even if they get lost once they will never get lost again. Drivers use a lot more energy and senses than the passenger.
Wekesa and Kimani, both 35 years of age, want to know where to invest. They have heard about investments and they think that it is about time they jumped on to this bandwagon. The dilemma both of them have is how to start and where to invest and be able to partake of these gains that they hear other people are making.
The question that is keeping Wekesa up at night is, “Where should I invest?” He has gone to several financial institutions to learn about the products they have. He also visited a stockbroking firm and spoke to a research analyst to get a basic understanding of what makes a good share. In addition, he has started reading about investments.
Kimani is bothered by the fact that other people seem to be investing while he is not. He has spoken to people who have invested but only to understand what they did, if they made money, and whether those opportunities are still available. He is keen on advertisements in the newspapers with titles such as “property for sale”.
Both Kimani and Wekesa want their money to grow, but they are approaching it from very different directions.
Wekesa is seeking to learn about investments, then make an educated choice. He is talking to people, not just to understand where he can invest, but also the rationale behind the choices others have made and the options available.
Wekesa is empowering himself to rely on his own choices. He wants investment opportunities to align with his goals rather than him aligning himself to the investment opportunity.
Wekesa is the driver in his vehicle. Kimani wants instant gratification. He sees no need for knowledge and just wants to be told where to invest. Kimani is adopting a system where he will always be dependent on someone to tell him what to do. He will never bear responsibility and will not be a decision-maker. He is not evaluating possible investment opportunities based on his objectives but the end-result of making money. His method will increase his reliance on what other people tell him to do, similar to the way a passenger relies on the driver of a vehicle. He will never build the investment skill and confidence that comes with the experience of continuously making your own choices.
In the short term, it may be easier to be Kimani. There are more than enough people selling something who are willing to use the right language to convince you to invest.
However, as long as you find yourself reliant on someone else’s opinion, you will continue feeling as if you do not know where to invest even though you may have made several investments because you have made yourself dependent on other people. However, take the time to ask questions that will help you understand the rationale behind why an investment would work for you. This is what Wekesa is doing.
Look at all the investments you are making or have made. Can you say why you have invested in them? If you cannot, you are a passenger. To become a driver is initially harder and more time-consuming, but it is always more productive. When you are listening or seeking investment advice, keep your ear tuned to the “Why”.
Waceke runs a programme on personal financial management. Email: email@example.com