Investing Basics
The most important objectives about investing are to grow and preserve capital, and also to provide income. This means that if you want to generate income and increase the value of your capital you must invest your money. Money doesn’t grow on trees, and it is through work, business, or investments that money is
created, but no one has ever achieved wealth from work alone.
The first thing you have to do is create an investment plan and set realistic goals based upon the amount of money you have to invest, your time horizon, and your risk tolerance. In order to achieve your financial goals, you must invest the appropriate amount of money over a realistic period of time.
There are three types of investors, Conservative, Moderate and Aggressive, which one are you?
Once you learn the investments types, you should have a good idea which investments fit your risk tolerance level. Based on the RISK-REWARD ratio you are going to find the best investments for you, this is how it works:
The Conservative Investor will choose low risk investments and will have smaller returns.
The Moderate Investor would be willing risk more money for higher returns.
The Aggressive Investor is willing to risk everything for the highest returns.
Examples of low risk investments are the savings accounts, money market and certificate of deposit (CD) accounts; this money is insured by the bank. The bank makes secure loans with your money; you will receive a low percentage return for your investment. Typically the bank would pay you from 1% to 5% annually, invest $ 1000 and you would get $ 10 to $ 50 a year, and your investment never loses value.
On the other hand, high risk investments like Stocks, Stock Options and Commodities, don’t offer the same insurance and your investment could lose value. But if you know how to do it right, the return on your investment could be tremendous, and you could double or triple your money in a matter of weeks or months. Invest $1000 in a high risk investment and you could make 10%, 20%, 30%… even 100% or 1000% return in your investment in a year, it is possible to turn $ 1,000 into $ 5,000 or $10,000 in a year. It may even sound scary for the beginner investor but this is the truth about investments, now, what if you could learn how to reduce your risk and increase your reward, and how do you do it?
KNOWLEDGE IS THE KEY TO SUCCESS!
Increasing wealth from financial investments requires a full understanding of how the financial markets work; we will give you the fundamental understanding of how they work. Keep in mind that the best investment you could ever make is in yourself, the best investments are in education and knowledge. Once you start investing and applying the knowledge that you have, the money will follow.
