By Udeme Udoh
More people desire to invest and build wealth. Despite this desire, there is a common perception that investing is only for those with access to large amounts of funds. This is because most people do not know where to even begin sourcing funds for investing. The truth is that there are many ways to raise capital for investing.
Leverage Your Trust
The people in your life are often a good first place to start from when searching for the capital to invest in an opportunity. Meet with them, enlighten them about your investment opportunity, and do not forget to mention when and how you plan on returning the funds. Remember; the main assumption here is that people perceive you as a trustworthy person, so be realistic and careful with risk when choosing to invest with someone else’s money.
As a potential investor, it may interest you to know that the only source of funding that will not disappoint you is your savings. Saving part of one’s income can be difficult; however, the exciting news is that there are several banks and non-banking financial institutions that can help you achieve your savings goals. Fintech companies like Cowrywise and Piggyvest have designed multiple ways for you to save money. So set a savings target for yourself, meet any of these institutions, cooperate with them and watch your goals become a reality.
Saving is the least risky way to raise investment capital. However, the size of your savings is subject to the size of your income. Therefore, if your income is small, then, your savings will be small and the subsequent return you make on your investment will be small. So, how do you solve this problem? Collaborating with other small investors may be the answer for you. This approach, if done correctly, rewards individual member of the group with a higher return than they could have achieved alone. This is particularly true for situations where the size of capital or principal is a major determinant of the return on investment. For instance, an investment may pay 9% interest to those with a 1 million Naira principal but 35% to those with a principal of 100 million Naira. Now, if a group of 100 people contribute 1 million each and invest, the benefit to each person (N350,000) will be higher than what they would have gotten if they were to invest individually (N90,000).
Getting a loan for investment capital is one of the riskiest ways to fund your investment as a retail investor, so do not attempt it if you do not already have a high appetite for risk. Due to the technicalities involved in this, you may want to rely on an investment advisor or consultant for direction and guidance.
Liquidate Some Assets
Dormant or unused assets are also a source of raising funds for new opportunities. That already replaced car, the unused home appliances and furniture, or that house that requires more money than you can afford to maintain. They can all be sold or auctioned for cash and invested. Whether you are looking to put that extra bit of cash you have leftover every month to better use or looking to invest in a big long-term project, the possibilities for funding are diverse and can be accessible with proper research and responsible consultation.