Investing has been the key to building wealth for decades but it isn’t just for the “wealthy”. Learning how to invest is as simple or as difficult as you make it. There’s no secret sauce and everyone has access to the same tools. Learning how to use Level 2 quotes, for example is something that everyone can learn. We’ll get into this in a little bit
What Is Investing?
“Investing: The act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit.”
Investing is all about working smart (not hard). The focus for investors is prioritizing your money in order to make a profit. Investing is different from spending, which is pretty easy to do and gives instant gratification. Vacations, high-end restaurants, shopping splurges and fancy cars are just a few examples. Of course, they make life fun but they don’t build long-term wealth. Investing requires prioritizing our financial futures over our present wants.
When someone invests, they set aside money outside of life’s necessities and puts it to work in the stock market. Investing is a way to set aside money while you are busy with life and have that money work for you so that you can fully reap the rewards of your labor in the future. Investing is a means to a happier ending.
Legendary investor Warren Buffett defines investing as “… the process of laying out money now to receive more money in the future.”
The goal of investing is to put your money to work in one or more types of investment vehicles in the hopes of growing your money over time. As the value of a company increases, so should the value of your shares.
Investing is a complicated subject, but it can be very rewarding to those that put in the effort.
If working less, investing more and generating lasting wealth without punching a clock is something that interests you, learning how to invest from someone with a proven track record is always a good idea.
A good teacher will instruct you on investing basics, how to manage your portfolio, risk reduction techniques, and more.
What Can I Invest In With The Stock Market?
There are a number of ways investors can go about investing. This includes things like putting money into stocks, bonds, mutual funds, ETFs, real estate or other alternative investment vehicles.
Each of these investment options has positives and negatives. It’s important to understand how different types of investment options work when it comes to your success and the amount of risk that you could take on. A simple example of this is mutual. In this example, you first need to know what a mutual fund is:
“A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. These investors may be retail or institutional in nature. Mutual funds have advantages and disadvantages compared to direct investing in individual securities.”
For starters, it’s important to know who is managing the fund. What are the fees and expenses? Are there any costs or penalties for accessing your money? These questions should be answered before making an investment into something like a Mutual Fund. But just having the answers doesn’t mean the work is over and there is no guarantee that you’ll actually be making money after you invest in a specific mutual fund. There is some work that needs to be done on the investors’ part in order to increase the odds of being a successful investor. Analysis, research and even just reading up on investing can all help – this is called Due Diligence.
Being able to intelligently navigate the investment “battle field” will give you a big advantage just by knowing how to take advantage of glaring opportunities that present themselves.