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What is investing?
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How and where to invest
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How to choose the best investment
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Concept of investment return and Rule of 72
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Investment Risks & Rewards
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Different types of Risk
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Benefits of Diversification & Asset Allocation
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Questions you need to ask before investing
Have you ever wondered how the
rich got their wealth and then kept it growing? Do you dream of retiring early
(or of being able to retire at all)? Do you know that you should invest, but
don't know where to start? We should emphasize now that investing isn't a
get-rich-quick scheme. Taking control of your personal finances will take work,
and, yes, there will be a learning curve. But the rewards will far outweigh the
required effort. Contrary to popular belief, you don't have to allow banks,
bosses, or investment professionals to push your money in directions you don't
understand. After all, no one is in a better position than you are to know what
is best for you and your money.
Investing: What is investing?
Investing is how you make your money
grow, or appreciate for long term financial goals. It is a way of saving your
money for something further ahead in the future. Saving is a plan to set aside a
certain amount of your earned income over a short period of time in order to be
able to accomplish a short term goal. It is a plan of action where you plan on
acquiring a certain amount of money by redirecting some of the money you have
received from your various sources of income. Investing, on the other hand, is a
much longer term activity. We consider investing as an action that is based on
long term goals and is primarily accomplished by having your money make more
money for you. Why Invest? There are three main reasons to invest. To beat
inflation, achieve financial goals like buying a car or paying for college, and
retirement. Yes, you should start thinking about retirement now. You can choose
from many investing options. You can invest in stocks, bonds or mutual funds!
When you invest, you are trying to increase the value of your assets by putting
your money to work earning more money. In some cases, you put a specific amount
of your money away (for example, in a CD) and leave it for a certain amount of
time to allow it to grow (through gaining interest). You may also choose to
invest in a company, in which case you may gain profit if you have chosen your
investment options wisely. You don't have to be wealthy to start investing. Even
a small amount can produce huge rewards over the long term, especially if you do
it regularly. For example, $2,000 a year (only $38.46 a week) can add up to
$361,887 in 30 years if it grows at an annual rate of 10%. It's called 'compounding'.
What Investing
Is Not…
Investing is NOT gambling. Gambling is putting money at risk by betting on an
uncertain outcome with the hope that you might win money. Part of the confusion
between investing and gambling, however, may come from the way some people use
investment vehicles. For example, it could be argued that buying a stock based
on a "hot tip" you heard at the water cooler is essentially the same as placing
a bet at a casino.
True investing doesn't happen without some action on your part. A "real"
investor does not simply throw his or her money at any random investment; he or
she performs thorough analysis and commits capital only when there is a
reasonable expectation of profit. Yes, there still is risk, and there are no
guarantees, but investing is more than simply hoping lady luck is on your side.
Next ==>>
How and where to invest
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