Where Should One Invest Extra Money? - [Part One]
By Stu Leventhal - Guru Marketing Tips Editor
People invest in all kinds of things; gold, stocks, real estate property. An investor’s goals are usually to keep their money safe and watch their wealth grow while they are not using it. You also want to park your money where it is costing you as little in taxes as possible.
Many financial advisors suggest that you invest in things that you have a personal interest in, rather than just gamble with your money. Choosing what you have an inkling or intuition or good vibe feeling about or listening to some invisible force that is whispering in your ear telling you something is about to get more valuable, is a risky way to treat one’s money.
You have to look out for your money or you will spend it all haphazardly and run out… In the same way, when you invest some money you have to be smart about what you buy to hold, so you do not lose money. The saying is; buy at low prices and sell at high prices! Still that is easier said than done for any consistent long while. If investing was child’s play, we’d all be rich!
There are no guarantees with investing. Things go up in value and also down, usually at the public’s discretion, even seasoned investors do get burned sometimes. Timing is everything! Knowing when to buy and when to sell is the key.
You want to narrow down your risk by doing lots of research and by paying intense attention to the news of the day, especially when breaking news directly affects the things you have invested in. Knowing when to hold onto your investment and when to cash out, is what keeps you profiting steadily but every commodity has its own set of circumstances that need to be monitored in order for you to stay ahead of the booms and busts. Things are deemed worth more or less based on what other investors are willing to pay for them. It is at the market’s discretion that investments go up or down in value.
If you know that something is going to going to be deemed worth a lot more very soon and you buy lots of it while it’s still inexpensive then after it gets valuable (usually due to the demand for it going up while the supply of it is shrinking), you have made a nice profit. You can sell it for a big money score or hang on even longer hoping it will continue to rise in worth.
Most Money Advisors will tell you not to put all of your eggs in one basket. This is called diversifying your portfolio. You vary your investments so that if any one market takes a nose dive your other investments assure that you do not lose everything. When you diversify you are still trying, of course, to win with all the different types of investments you make but there should be almost zero chance that all of your assorted varying kinds of investments could all go belly up at the same time.
When you diversify, a smart strategy is to take a small portion of your wealth and use it for a risky venture which has the potential of paying off really large for you, while keeping the bulk of your money invested in safer places that while not paying great earnings, are not really at any risk of shrinking or disappearing on you. Can you see how, in this case, you have a nice chance of getting much richer with your high risk, high returns speculation but if something does go wrong and you lose money there, your remaining safe investments (the bulk of your wealth) are still earning you a steady but slow profit that will eventually earn you back what you lost while taking that risky gamble.
You should never gamble with all of your money or a large portion of your wealth, even when a well trusted friend is assuring you that the investment is a Sure Thing. Always have a contingency plan in place for gaining back your losses.
By being careful and investigating before you invest and not getting too greedy and not betting on too many long shots…one can cut one’s risk down and have a good chance of building a nice and steadily growing portfolio of holdings over time.
When a stock or other investment starts to go sour you have to ask yourself whether you feel it might rebound or make a comeback soon. You are only guessing on the direction that the success of a company is going or whether one of its newly introduced products will be a winner unless you have done your research on the industry and the customers of that industry. The more you know about the things you invest in, the easier it is for you to know when to sell and when to invest more.
There are lots of inventors and plenty of idea people specializing in any and all areas of industry and business. They are all looking for money to bring their new product to market. Never invest in the next big thing, unless you have some real knowledge about the subject. You should always have a clear understand of the nature of the business, before you park your money there. Look at the company’s competitors and what they are doing. Is the competition developing a similar product or moving in a totally different direction?
Sure you want to get in early, on the next big futuristic invention that is going to change the world forever… If you do get in early, you are poise to become wealthier than all you ever dreamed! The question is always, of course, are you betting on the right visionary?
Some more questions to ask, yourself, before you invest with an inventor or decide to fund a new unique idea are:
Investing is not always just about making money. Sure you wish to make a profit but many people fund and back the things that they have emotional feelings for. Some people are happy to back a company that is actively involved in protecting the environment even though they could make more profit backing another company.
Now-a-days it seems there is always a new tech startup company popping up. If you are in the dark when it comes to computers and tech then putting money into a tech startup is, for you, like going to the horse track and placing bets because you like the horses’ cute names. Yes, you could make some money and win a few horse races but it would be just luck that will not last long term.
When investing in new technology firms you must always remember that there will be few physical assets that more traditional companies have such as; products in inventory, real estate properties like office buildings, retail stores and warehouses, furniture, manufacturing machinery, a warehouse full of parts. Technology firms deal with digital assets like software programs, websites and concepts that are hard to define and harder to value, often making it very difficult to impossible when the tech company fails to gain back some of your investment by selling off things the company owns as you would when liquefying a brick and mortar company of the past era.
One golden rule of investing that no one should ever break is; if you do not have the money to lose do not invest it. Yes, I get it, there will always be people tooting the next big investment trend or pitching a sure thing and you will be tempted to go in big. The biggest mistake anyone can make is to borrow money to invest in something! No matter how good an investment opportunity seems, don’t gamble with other people’s money!
Do not take a loan out to invest or max out your credit cards to invest. Investing is about parking extra money that you do not need or plan on using for a while, in a safe place where it will grow into more extra money for you! Investing is about preparing for your future comforts and security. Investing is also for saving up for emergencies and for paying for something extra special like a down payment on a home or for a family trip abroad. Investing is not gambling!
Please click to continue reading part two:
Investing 101 – Money Building
Growing Your Extra Savings! [Part Two]
Many financial advisors suggest that you invest in things that you have a personal interest in, rather than just gamble with your money. Choosing what you have an inkling or intuition or good vibe feeling about or listening to some invisible force that is whispering in your ear telling you something is about to get more valuable, is a risky way to treat one’s money.
You have to look out for your money or you will spend it all haphazardly and run out… In the same way, when you invest some money you have to be smart about what you buy to hold, so you do not lose money. The saying is; buy at low prices and sell at high prices! Still that is easier said than done for any consistent long while. If investing was child’s play, we’d all be rich!
There are no guarantees with investing. Things go up in value and also down, usually at the public’s discretion, even seasoned investors do get burned sometimes. Timing is everything! Knowing when to buy and when to sell is the key.
You want to narrow down your risk by doing lots of research and by paying intense attention to the news of the day, especially when breaking news directly affects the things you have invested in. Knowing when to hold onto your investment and when to cash out, is what keeps you profiting steadily but every commodity has its own set of circumstances that need to be monitored in order for you to stay ahead of the booms and busts. Things are deemed worth more or less based on what other investors are willing to pay for them. It is at the market’s discretion that investments go up or down in value.
If you know that something is going to going to be deemed worth a lot more very soon and you buy lots of it while it’s still inexpensive then after it gets valuable (usually due to the demand for it going up while the supply of it is shrinking), you have made a nice profit. You can sell it for a big money score or hang on even longer hoping it will continue to rise in worth.
Most Money Advisors will tell you not to put all of your eggs in one basket. This is called diversifying your portfolio. You vary your investments so that if any one market takes a nose dive your other investments assure that you do not lose everything. When you diversify you are still trying, of course, to win with all the different types of investments you make but there should be almost zero chance that all of your assorted varying kinds of investments could all go belly up at the same time.
When you diversify, a smart strategy is to take a small portion of your wealth and use it for a risky venture which has the potential of paying off really large for you, while keeping the bulk of your money invested in safer places that while not paying great earnings, are not really at any risk of shrinking or disappearing on you. Can you see how, in this case, you have a nice chance of getting much richer with your high risk, high returns speculation but if something does go wrong and you lose money there, your remaining safe investments (the bulk of your wealth) are still earning you a steady but slow profit that will eventually earn you back what you lost while taking that risky gamble.
You should never gamble with all of your money or a large portion of your wealth, even when a well trusted friend is assuring you that the investment is a Sure Thing. Always have a contingency plan in place for gaining back your losses.
By being careful and investigating before you invest and not getting too greedy and not betting on too many long shots…one can cut one’s risk down and have a good chance of building a nice and steadily growing portfolio of holdings over time.
When a stock or other investment starts to go sour you have to ask yourself whether you feel it might rebound or make a comeback soon. You are only guessing on the direction that the success of a company is going or whether one of its newly introduced products will be a winner unless you have done your research on the industry and the customers of that industry. The more you know about the things you invest in, the easier it is for you to know when to sell and when to invest more.
There are lots of inventors and plenty of idea people specializing in any and all areas of industry and business. They are all looking for money to bring their new product to market. Never invest in the next big thing, unless you have some real knowledge about the subject. You should always have a clear understand of the nature of the business, before you park your money there. Look at the company’s competitors and what they are doing. Is the competition developing a similar product or moving in a totally different direction?
Sure you want to get in early, on the next big futuristic invention that is going to change the world forever… If you do get in early, you are poise to become wealthier than all you ever dreamed! The question is always, of course, are you betting on the right visionary?
Some more questions to ask, yourself, before you invest with an inventor or decide to fund a new unique idea are:
- Is the inventor credible? Has the inventor done anything like this before?
- Will the public embrace the new invention being pitched?
- Will the invention actually work, doing all that its creator claims it will?
- Are there any other risks to putting your money behind this proposal? For example, could your reputation be harmed due to the public lashing back because of a social issue, concerning the new product you are considering funding.
Investing is not always just about making money. Sure you wish to make a profit but many people fund and back the things that they have emotional feelings for. Some people are happy to back a company that is actively involved in protecting the environment even though they could make more profit backing another company.
Now-a-days it seems there is always a new tech startup company popping up. If you are in the dark when it comes to computers and tech then putting money into a tech startup is, for you, like going to the horse track and placing bets because you like the horses’ cute names. Yes, you could make some money and win a few horse races but it would be just luck that will not last long term.
When investing in new technology firms you must always remember that there will be few physical assets that more traditional companies have such as; products in inventory, real estate properties like office buildings, retail stores and warehouses, furniture, manufacturing machinery, a warehouse full of parts. Technology firms deal with digital assets like software programs, websites and concepts that are hard to define and harder to value, often making it very difficult to impossible when the tech company fails to gain back some of your investment by selling off things the company owns as you would when liquefying a brick and mortar company of the past era.
One golden rule of investing that no one should ever break is; if you do not have the money to lose do not invest it. Yes, I get it, there will always be people tooting the next big investment trend or pitching a sure thing and you will be tempted to go in big. The biggest mistake anyone can make is to borrow money to invest in something! No matter how good an investment opportunity seems, don’t gamble with other people’s money!
Do not take a loan out to invest or max out your credit cards to invest. Investing is about parking extra money that you do not need or plan on using for a while, in a safe place where it will grow into more extra money for you! Investing is about preparing for your future comforts and security. Investing is also for saving up for emergencies and for paying for something extra special like a down payment on a home or for a family trip abroad. Investing is not gambling!
Please click to continue reading part two:
Investing 101 – Money Building
Growing Your Extra Savings! [Part Two]
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