All business owners will agree with us that nothing is more herculean than getting investors to invest capital in their businesses, especially if it is a new line of business-such as Photography. The reason for this difficulty is not far-fetched as most investors have phobias of these new businesses having tendencies to collapse if not properly managed. Similarly, they also find it difficult to invest in these businesses because they are not familiar with them and do not have any form of guarantee as to them excelling. Here in Nigeria, that is not always the situation as most Nigerians are yet to realize that there is indeed a difference between saving and investing. Nigerians often mistake savings for investments and this article is directed at correcting this error and also showing why investment is paramount to both business owners and investors.
First on the list why investment is different from saving and why it is beneficial to both investors and business owners is that profit is guaranteed. Unlike savings where an individual keeps his money for mostly the purpose of safeguarding, investment helps to generate more income for the parties involved. This is because any business owner seeking investors in his business is motivated by the zeal to maximize profit and not run into a loss. He is constantly aware of the fact that he needs to meet up to a target because some of the capital is not his. Therefore, this serve as both a motivation and warning to avoid failure of the business.
Another reason why investment is important and different from saving is that it is symbiotic in nature. By symbiotic, we mean that it is beneficial to both parties involved. As opposed to savings where a person gets little or no profit-in investment, a person is guaranteed of adequate share of profits depending on the amount invested. This point is significant because it shows that the interest of both parties involved is greater than the desire of an individual to make profits for himself as is probable in savings. Thereby, investment enhances more wealth creation.
Investments serve as means of fulfilling your financial goals by providing financial security. What this means is that unlike savings where a person keeps capital for the purpose of providing immediate needs, investments are directed at providing future needs like buying your own home, buying a new car, your children’s education etc., are some goals that are worth achieving. It is like saving for a rainy day or case of emergency. This is noteworthy because the future is not definite and what better way to secure your finances than to have a continuous means of amassing more wealth. As long as a business is functional, an investor will continue to get his profits.
Also, investments can serve as effective measures of fighting against inflation. As the year passes, prices of items continue to increase and if a person does not have a steady means of generating more wealth, he is likely to eat into his savings and end up being in debt. So, investment can serve as a means of maintaining a particular standard of living. It is therefore imperative to state that one needs to plan for the future by investing. So, investors should look out for business owners with feasible goals for maximizing profit; support their businesses by investing in them because as they do so, they secure their own future.