Do I have to be really smart to make money investing?

No, you don’t. There are many stories of everyday working-class people who aren’t investment professionals but have built wealth by investing.

Here’s a real-life story of a successful investor who never studied finance or economics:

Grace Groner lost her parents at the age of 12. A family friend took her in; they took responsibility for her education. After finishing at a local college, Grace got a job as a secretary with a meagre salary where she worked her whole career.

She was described to have lived most of her life humbly and quietly in a one-bedroom house. She never even owned a car. But when she died in 2010, at 100, she had $7 million in investment, which she gave to charity.

“Where did she get that kind of money,” all her neighbours asked? You want to know too.

It was discovered that Grace had bought three $60 shares of the company she worked at, Abbott Laboratories, a pharmaceutical company, and never sold them. She also reinvested the dividend. For over 40 years, she never touched her investment.

Grace didn’t know how to read financial reports, technical graphs or understand the latest central bank monetary policy. She just invested in the company she knew well and let it accumulate for a long time.

She did the basic thing in investing: take your savings, invest in the shares of a company you know, reinvest the dividends you get and leave your investment to grow over a long period.

Turns out even knowledgeable folks also like to keep things simple when investing.

A survey of over 600 finance professors at major United States’ universities showed that about two-thirds of the professors have the majority of their assets in index funds — these are low fees funds that allow you own all the companies in a stock market.

Even though these finance professors teach complex investment theories in their lecture rooms, their personal funds are safely spread out over several companies.

If you are not a brilliant financial analyst who can access superior information about an investment, instead of trying to outsmart the market, you should also be looking to do simple things.

Two simple strategies when investing

1. Automate a regular investment in a company you know

Set a periodic payment into your investment account to buy stocks of a company at regular intervals. Investors call it dollar-cost averaging. It’s a way to offset short-term swings in prices of a company’s shares and allows you to build wealth over a long period.

2. Diversify

If you’re not sure of a particular company to invest in, spread your investment across several companies just like those finance professors. Diversification is splitting your investment between the stocks of different companies.

For example, buying the stocks of Airtel and MTN, two of the biggest telecommunication companies in Nigeria would allow you to benefit from the growth of the Telecomms sector in Nigeria; Or splitting your investment among companies that would benefit from the growth of streaming services like Netflix, AT&T, Amazon, Apple and Disney.

You could also buy an index fund. An index fund gives you exposure to all the stocks listed on the stock exchange. Example of an index fund is the Vanguard U.S. Total Stock Market Index that gives exposure to all the companies listed on the U.S stock market.

Both of these strategies don’t require a finance degree or a high degree of smartness, just consistency.

Chaka is the go-to global investment platform for African businesses and individuals