How to Invest Collaboratively with Friends: Tomie Balogun

When you invest with others, you take advantage of the power of many - @tomie_balogun Click To Tweet

As a certified financial educator and Instructor, Tomie Balogun has a lot of experience in investing with friends. While pursuing her MBA, she and a few classmates started an investment club.

Their passion to achieve financial freedom and make an impact on society saw them successfully invest in various small businesses and assets. 

However, investing with friends hasn’t always been that easy. Like Tomie, many people have had bad experiences either loaning money to a friend or requesting for a loan. The conclusion: money and friends are a horrible mix!

However, the question many ask, is it still worth investing with friends or anybody else?. Tomie gives us tips on how to make this work. 

The Power of Many

Think about the way you ask more people to contribute money to a party, so everyone can have more food options. Investing with other people helps increase the number of resources you raise and strengthens your financial future.

Investing in Bigger Things

Co-investing in an investment club gives you the opportunity to invest in bigger opportunities, share risks and share higher returns as well. For instance, while real estate is a great asset class that always appreciates, not a lot of young people can invest in it.

However, if 5 or more people decide to come together and invest, they will have more cash. Over time, they can earn returns from their initial investment and continue to flip multiple real estate deals. That’s a better option than waiting till your 40’s to eventually own real estate.

Choosing the Right Team

You might be thinking, co-investing or starting an investment club is great but what about the emotional issues that come with investing with friends or colleagues at work? This can be tricky!

The first thing you need to do while selecting partners is to avoid sentiments. You need to make sure that you choose your partners with clarity and objectivity. When identifying people, choose partners who are disciplined with spending money and more importantly, have a strong sense of integrity.

Shared values are very important when co-investing.

Details, Details, Details!

First, you need a legal structure in place to protect everyone’s interest. When this happens, you limit liabilities in investment deals. You can register your club as a limited liability company or a limited partnership.

What’s important is to make sure you have the papers to support your words if things go wrong.

Secondly, they say the devil is in the details. In creating your legal documents and other admin paperwork, make sure you don’t skim through anything.

Practice good financial bookkeeping, assign roles to manage tasks and create a constitution! Remember all information can be important!

Make that Money Work

Once you sort your membership and legalities, you can then start contributing money. Don’t set unachievable contribution rates, but set goals that everyone can work towards. If everyone believes in the goal, they will eventually build it too.

At the end of the day, there are many options to invest. However, investment clubs are both great for collaborative investing and also fun! They are a smarter way to take advantage of the power of many to achieve your wealth goals sooner.

So as soon as you can, get your motherland moguls into formation and start co-investing together towards your financial freedom.

Gloria Barasa: Balancing my baby with my startup

It was my last day at work and the first day of the next phase of my life. I had decided to become a full time entrepreneur and solely focus on building my own business.

My 10-month-old baby daughter would be my constant companion since my nanny was going away on leave at that time. This meant that it would take me longer than expected to get my business up and running.

Several weeks later, I now realize that setting up a business is a gradual process that requires time and dedication. Things also don’t always go as planned. Here is what I have learnt from my journey:

Have short, medium and long term goals

Dividing your goals into these categories will help you to focus while managing your time effectively. A popular acronym developed by George T. Doran is S.M.A.R.T. This means that all goals should be Specific, Measurable, Achievable, Relevant and Timely.

Practising this approach can be beneficial if adopted at the initial stages of business development. Overlooking any of the criteria could hamper progress and create frustration.

I, for example, wanted to have my company up and running in two weeks. However, this was not possible given my home situation. I was able to adjust accordingly and establish my company within a more realistic time frame.

In taking this approach, I quickly learnt that focusing on gaining a large customer base and revenue without fully building and understanding my business model would not work.

Adapt quickly

According to Martin Reeves and Mike Deimler in their Harvard Business Review article, Adaptability: The New Competitive Advantage, a company must have its antennae tuned to signals of change from the external environment, decode them, and quickly act to refine or reinvent its business model, and even reshape the information landscape of its industry.

Going into the same industry as my previous employer, I initially believed that developing a similar work structure would lead to business success.  However, I realized that this approach would not be ideal given the lack of human and financial capital on my end.

I chose to adopt the most relevant aspects for my business such as customer relations. I opted to take a different approach on other aspects such as marketing.

Goals are moving targets

Business goals are moving targets.  You can’t afford to get comfortable as this leads to stagnation. It is important to be open to providing current market needs. Keep abreast of the happenings in your industry as well as related industries.

This can be done through reading business journals and articles, attending conferences with industry peers, or simply carrying out research to understand the latest developments in the market. As an entrepreneur you need to keep up with the ever-changing market needs.

Enjoy the ride

Make the most of your experiences. Learn from each of them. Don’t be consumed by the business, however, as this will result in stress. In order to avoid frustration devise various coping mechanisms.

According to Forbes magazine, this could be as simple as scheduling breaks throughout the day or focusing on other interests that are unrelated to your business. Most importantly, appreciate your family in this moment. In my case, being with my baby daughter was the best stress reliever I had and probably will ever have.

At the end of the day, my nanny being away turned out to be a blessing in disguise.