Investing 101: What you need to know

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Let’s get you started in investing!

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What is investing?

The dictionary definition of investing goes like this:
  1. Expend money with the expectation of achieving a profit or material result by putting it into financial schemes, shares, or property, or by using it to develop a commercial venture.
  2. Provide or endow someone or something with (a particular quality or attribute).


In simpler terms, investing is the act of committing your money or capital to an industry and expecting additional income or profit from it.

In other people’s words – legendary investor Warren Buffett in particular – investing is “… the process oflaying out money now to receive more money in the future.

What are some pros and cons in investing?

There are advantages to investing, let’s list down some of them:

  • ·         It can work as a provider of additional income. This will be advantageous especially if you’re nearing your retirement. This can help you if you’re looking for extra income to help in day-to-day living expenses.
  • ·         It can easily cater to your changing requirements. Here is when you investment portfolio will be coming in. An investment portfolio can be designed to help you achieve different goals as you go through life.
  • ·         You can outperform inflation. In order for your savings to grow in real terms as time goes by, they must first earn a rate of return after tax that is greater than the rate of inflation. Finding such can end up being taxing but its worth to consider stocks that has the capability of outperforming stocks.

  • ·         When you invest, you can do so while giving consideration to your financial situation. It can end up changing over time, but with investing, you can also tailor you investment to suit that


Of course there are also disadvantages:
  • ·         You can end up having a difficult time outperforming the market. You can also end up making investing decisions that will result in better return if your chose to devote that money in a different investment and didn’t touch it.
  • ·         Deciding to go invest instead of trade can end up being the slower way of making money, assuming that you could be an excellent trader instead.
  • ·         There is always a possibility of losing money whatever investment you end up making.
Investment concept table

REMEMBER

An investment should never be a gamble. If you do end up deciding to pursue this path, you should first do your research, study up on you chosen stocks, and make sure you know what you’re doing before making any final decisions.

You should also put huge consideration on the amount of money you do decide to invest. Do not put in everything or your chances of loss will be bigger than your gain.

There is no such thing as a sure-win investment. You should have reasonable expectation regarding the profit you make in every investment.

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