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Get your financial 'ducks in a row'

Commemorating 'Youth Day', The Edition brings readers some financial know-how from a student 'guest writer', courtesy of Maldives Stock Exchange.

12 August 2018, MVT 09:22
"The final rule is to make your money work for you by investing in securities. Smart investments will multiply your earnings and increase your wealth over time" says, MSE Intern, and law student at Maldives National University browsing Infinity by Maldives Securities Depository over a 'cup of joe'. Using an Infinity ID, users may securely subscribe to IPOs. This article is brought to readers by Maldives Stock Exchange (MSE). PHOTO: MSE/THE EDITION.
12 August 2018, MVT 09:22

The phrase, money doesn’t grow on trees, is often used in several contexts. Whilst I am absolutely positive that money is not the literal fruit of any tree, there stands little reason to suggest that money cannot, in fact, grow! Money grows when you save and invest wisely.

Three Rules to Making Money

Your first option is working at a 9-to-5 job, one which perhaps you are not too excited about. For a fixed income, you offer limited time, which you eventually run out of; leaving you dependent on your descendants, with no means of generating more income.

The next would be to run your own business and employ people to work for you. In such a setting, they contribute their own time to earn for themselves, while simultaneously creating wealth for you.

The final rule is to make your money work for you by investing in securities. Smart investments will multiply your earnings and increase your wealth over time.

Perusing these golden rules, I found myself speculating on where I, myself would fall when it comes to making money.

A 'cup of joe' could change your life

While most of us do not have savings burning a hole in our bank accounts, we do have ways in which we could save a couple of Rufiyaa to get that little edge in life.

Now, assuming you buy a decent coffee for MVR 20 every day, you are spending MVR 7,300 per year.

But what if you replace your daily caffeine intake with an equivalent investment on say, for example, a Bond of MVR 100/-?

You just bought yourself 73 Bonds with a 05 year term and a return of 5% per annum. In five years, you pocket MVR 38,325.

I know you did not hit the jackpot there, but this could possibly be a stepping stone for you to go enjoy that Arctic Monkeys concert you have always wanted to see. The point is, small investments can be a beginning. If you choose to invest, you can multiply your wealth. You just did it with one cup of coffee.

So think about it, explore ways to save more and invest in your future. It is relatively painless, and the rewards are plentiful. Of course, as you grow older and attain financial stability; you should be able to invest more. You'd be surprised at how quickly a couple of Laari could turn into bundles of Rufiyaa.

Go out on a limb and run the risk!

Now you might be thinking, gee-whiz-this-really-tickles-my-pickle-ye-good-man - but what about the risks?

Truth be told, investments are often risky and it takes time to understand how the market operates. Keep in mind that you could lose some, if not all your money. However, it is often said that the greater the risk, the greater the reward.

Albeit this is not a mantra to take uncalculated risks and throw your money at every opportunity that presents itself, this is good motivation to study and speculate, on investing in the securities market.

The key is to diversify - don’t put all your eggs in one basket. Spread your risks and take advantage of the game of averages. This means you can overcome your loss from one investment through returns from another.

There is no such thing, as a born with it investor who knows all the tricks of the trade. Every successful investor today, started with just the basics and went through a learning curve to get where they are now. This is not to say that there aren’t those lucky few who stumble on to a family fortune or come up with something brilliant like Facebook.

Fathimath Eema Hussain, a law student at Maldives National University and intern at Maldives Stock Exchange, brings The Edition's readers her 'hot take' on how to make money, in today's rather precarious financial market. PHOTO: MSE/THE EDITION

Time after time – people of the most modest means begin their journey to reach financial independence and attain all that it promises; whether it is a new place to call home, educational opportunities, or a comfortable retirement.

If they can do it, why can’t you?

The bottom line

Hot on the heels of this hot-take is that it is ridiculous to not save for your future in your youth. It is never too soon to start saving. Investing the time of your youth in investments is key to multiplying your money.

Why?

You can afford to make mistakes, while you still have time to make up for them.

If you are still sceptical about investing your money in the securities market, see this article as redundant, and do not want to take a step towards a better future - the game show host in me wants to ask you; Is that your final answer?

Great things rarely happen while we hibernate in our comfort zones. It is not because things are difficult that we do not venture – it is because we do not venture that things are difficult.

Test, fail and adjust. After all, success is built on failure.

So congratulations on taking your very first step on the road to financial investments. Bet you didn't even break a sweat!

DISCLAIMER: All views and expressions in the article are that of the author and in no way represent the professional advice of Maldives Stock Exchange.

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