Why Invest your Capital: A Beginner’s Guide to Investing

Personal investing

Start now with small sacrifices and you will reap the benefits in the long run

That’s the key in investing for personal wealth building. The idea is to ‘trick’ yourself into doing it now. Why? Because “tomorrow” is never the right time when you’re considering the best time to start investing.

‘The right time’ talks about the perceived value of things. For example, all over the world, casinos use the same tactic to encourage people to gamble, and they achieve this by using chips rather than actual currency. This consequently strips money of its value by creating the illusion that throwing down a $1,000 chip is not that much different from putting down a $100 chip, whereas gambling away $1,000 worth of notes would be considerably harder than spending a $100 note.

Indeed, in a somewhat similar manner, actual money can create an abstraction away from what is truly important to us and what we value.

What do you truly value?

Understanding the need to invest comes from first knowing the things that we value. In general, most people tend to put importance on similar things, such as:

  • Family
  • Financial security
  • Owning a home
  • Being able to retire comfortable
  • A savings account set aside to provide options for the future

Even if the list above does not match your current priorities, you may prioritise other wants and needs that require a larger amount of money than you might be earning or saving. Simply earning a monthly salary might not be enough to cover future expenses. And that is why investing your capital comes in handy.

Investment strategies

Understanding investment and debt (credit) as a similar concept

Empower yourself by learning some basic finance. Newsletters and regular reading of finance or investment blogs will keep you updated with investment news and insights while allowing you to invest with confidence.

Investment can be understood as the opposite of debt using the same concept. If you make a purchase on credit, you’re essentially borrowing from the future to finance your current need. On top of the debt that you owe, you will accumulate interest based on how long it takes to pay off the debt.

Investments have the opposite effect. If you make an investment, you are taking money away from your present by putting it aside for future use, while growing your asset and earning even more later on.

Let’s illustrate this by using yet another example. Let’s say that your current self needs a car costing $100,000. Given the choice, would you prefer to go back five years and slowly but surely save for your upcoming purchase, or would you rather take out a loan for the car and spend the next five years paying off the loan with interest?

It is possible that five years ago you would not have had the foresight to know that you would need a new car in the future, hence leading to no investment or savings set aside for the purchase. In order to enjoy the benefits of an investment, you have to understand what you value, set goals, invest beforehand, and be patient. A comfortable retirement is a common goal that many strive towards, meaning that now is the time to start investing in your future for when you no longer earn a dependable income.

How much would you be required to invest?

After taking a look at your needs, wants, and the things that you value, the next step is to attach an approximate monetary amount to them, to give you an idea of your target investment. For instance, if your goal is to invest in your children’s academic fees, calculate your target by multiplying the rate of education inflation (which has historically been CPI + 4%) with the current school fees, like so:

Current Schools Fees X (1 + Education Inflation) number of years = Future Costs

As soon as you get an estimate of the amount that you would require, you can calculate how much to start investing in the present.

Investment nest egg

Use these three guidelines before starting your investment:

  • Decide on what you truly value. Knowing the answers to this will guide you when saving and investing, and help you figure out your goals while giving a purpose to your investment.
  • Refuse to go into debt or buy with credit. Although it seems like the fastest and easiest option to fulfil your needs, debt can be very expensive and can take years to pay off. Investment for a future need is the best option.
  • Calculate an estimate for your goal. Calculating how much you need to fulfil your future goal will help you in understanding how much you need to start investing in the present.


The best time to start investing is now.  Don’t wait until you have enough money to do it, until the market conditions is perfect, etc.  Now matter how small or big your initial investment is, what’s important is that you get started.

Once you get the ball rolling, keep it rolling; set aside a percentage of your income for investment purpose.  Do this regularly and continuously.  That’s the key in wealth building and a proper way to invest your capital.

Much success to your investing endeavor!