February 01, 2021   by
 Expectations vs Reality
An image of savings coins

There is a pearl of profound wisdom found in investing. When looking for financial freedom, investment through savings and investment groups such as Chamas may be a direct gateway. Most people work and earn an income for years. However, later in life they realize that they may need tangible assets to show their effort. Investments also play an important role in increasing one’s income. Investment groups are famous for their support, in career and financial advancement. In these groups, members pool their money and invest it into different businesses and ventures that seem profitable. These groups are additionally the most economical entities to form, operate and maintain.

When employed effectively, investment groups may be the smartest way of making money from investments. One of the main reasons is because there is the advantage of the power of many. The more money one may have, the more they can venture into different businesses and exploit different opportunities. Additionally, it reduces the burden of risk as it is divided between the members while simultaneously increasing the profit margin. The losses are shared among members, similar to profits and this reduces the individual burden of failed investments. Investment groups are also smart investment choices.

Contrary to individual investors, investing as a team requires less effort as each member is responsible for the investment. Regular meetings help the investment group to follow up on the investment. Moreover, there is a limited regulation that governs the assembly of investment groups. Therefore anyone eligible can easily create or join an investment group.

It goes without saying that every individual joins an investment group filled with expectations. The expectations range between individual members’ experience, biases, and knowledge as well as the investment outcome. These expectations sometimes do not match the reality of the investment groups.

Investment Groups Lead to Astronomical Success

One of the expectations is that the success of the investment group will facilitate their expenses. They assume that they can use it as their only source of income. This assumption creates the illusion that a day job or other sources of income are not useful anymore. One needs to be flexible when it comes to investment. When an investment sowed reaps large benefits. One may retire early and live a comfortable life than they would while working at their current jobs.

Contrary to this assumption it is less likely that through one investment one may become rich overnight. Therefore, it is important to remain at a job that offers a steady income. Research shows that there are fewer success stories of people who had astronomical success. Far between lies the exception rule. The one virtue required when investing is patience. The reality of the matter is that it might take some time before an investment drastically changes one’s way of living. It is important not to rely solely on the Chama if one has other alternatives.

Streamlined Goals and Objectives

Streamlined Goals and Objectives
An image of a typewriter printing the “Goals” of an investment group

The second expectation that people have when joining investment groups is that all members have a similar target. This is because most groups are formed by members who are socially bound. They often assume that they have a common goal and therefore they will agree on everything. The members are often people who have a mutual network, be it schoolmates, workmates, or housemates. The status of the formation of the group is not directly linked to the focus and the purpose of the group.

If a group does not ascertain its purpose and goal, then it may become disoriented. When making contributions towards investing people stack their money. The tension may be high if there rules to govern the investment group does not exist. The groups ought to have an agenda and hold constant meetings to help in the decision-making process. However, if there is no clear objective, the investment group is likely to collapse.

The reality is that group members may have formed an alliance due to their similar practice. However, the reason for pooling the money may be different. It is therefore important to select the main constitution to streamline the governing structure. This will make navigation easier and ease conflict along the way, as different members may have different opinions. Alternatively, before forming the group the founders may make clear their agenda and establish the group’s aims. This will ensure only members with similar interests join the Chama. This will streamline everyone’s expectations and ensure they are realistic and compatible.

Factors that Help Expectations Meet Reality

Some of the factors that will help expectations to meet reality include addressing issues such as clearly stating how long the club will run. This will help in creating a business and investment strategy on the goal of the business. They may state how long the minute will run. This will involve the selection process for leaders and the hierarchy. There needs a clear line of expertise and the members may decide whether the group may outsource experts.

The third is stating all the requirements and expectations of each member. This will help maintain peace and increase productivity ensuring the everyone meets the teams main goal. Lastly, each member should state the amount of risk they are willing to take. As an individual investor one may not take a large risk, however, a large investment group may be more daring. It is critical for an investment group to determine the business venture they wish to pursue. They should determine whether it requires a speculative investment or they would prefer a more cautious approach.

Investment is similar to Gambling

Investment is similar to Gambling
An image of credit and debit cards, which investors use for transactions

Thirdly, there is the expectation that investing in a venture is similar to gambling. People often assume that because the two involve taking a risk they are alike. The reality is far more different from this. Unlike gambling, investments have a method to the madness. Although gambling and investment require research, one is more likely to mitigate the risk of investment. Thorough research on the current market trends investment becomes a lesser risk. Education on the market forces is crucial in assessing the value of any investment. It smoothens the decision making and investment process. For any investor to be successful, it is less likely for them to gamble their money away. Contrariwise, they tend to venture into potential businesses after choosing companies, properties, products, and services that are more likely to give great returns.

Saving Stops when Investment Begins

Saving Stops when Investment Begins
An image of savings growth

Another expectation made by members is that when the investment group starts investing, they may stop investing. More often than not, this is not the case. Once one joins an investment group they have to save for a while within the period given agreed upon by the group. Later on, they use the money in investments, however, the regular payment is still occurs and the contribution should not stop regardless. One should not put all their eggs in one basket, and therefore the contributions may prove useful in case an investment fails.

Moreover, the savings are critical for the business to elude frustration in the event the investment does not reap expected benefits. Venturing into different businesses increases the chances for success. The investments will not only minimize risk but also create opportunities to venture into more businesses. Savings on the other hand, help fund diverse business ventures. Once profits the investment funnels back the profit into the group, they help grow the value of the initial investment.

Investment Experts are a Quick Fix

Lastly, members of an investment group often expect that hiring an investment expert will automatically give back great returns. They may also expect that the expert advisor may be in charge of all the decisions in the investment group. The reality of the matter is that these experts will only offer guidance and educate the company on the investments that may have potential businesses they may venture into. The group is only as strong as its educated members. Therefore even though the expert advises the group, it is still up to its members to ensure that it is successful. Once the group members are no longer reluctant to be hands-on, then they may utilize the information gained from the experts and invest.

Don’t forget to join Chamasoft to digitalize your Chama and investment group.

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This post was written by Martha Adhiambo

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