Investing 101

For this blog we want to switch it up a little bit. I share a lot of great value about business tips, motivation, credit, etc., but one thing I realize is that people need more information when it comes to how to invest. People who you see with money, have it due to knowing how to invest their money versus spending it. So this will be a very informative blog to share terms, tips and information on investing. It may not be as entertaining as the other information but it’s definitely information that you NEED! So pay close attention..

WHAT IS INVESTING?
Investing is the act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit.

Contrary to popular belief, investing is actually pretty simple. Investing means putting your money to work for you. What it really is, is a different way to think about how you can make money or increase your potential earnings. Most of us get a job and work for a business or company that we eventually retire from using the offered 401k plan that the job provides. However, I see one BIG problem with this.. .Well, TWO really!

Where is your freedom? Why do you choose to live your life centered around the job(s) that you have? & Why are you working FOR your money instead of putting your money to work?

CONSIDER YOUR OPTIONS

So let me ask you this…

What if you want more money? Will you have to work more hours?

I’m sure we can all agree that having a bunch of money is no fun if we don’t get the leisure time to actually enjoy it. Truth be told, (and as cool as it would be), you can not duplicate yourself to increase your working time.

I can’t lie, I do wish their was two of me, but hey we all know that isn’t possible.

And this blog is to introduce you to a new way to make your money work for you. So, whether you are putting in overtime hours, mowing a lawn, catching up on sleep, working on a college essay or socializing with your friends, you can also earn money by investing.

 
Did you know making your money work for you maximizes your earning potential whether or not you receive a raise, decide to work overtime or look for a higher-paying job? I’m a big believer that ONE job is made for one person and it breaks my heart when I see people working two or three jobs to get by.

That is why I wanted to take the time to share this information because I feel like everyone needs to know there is another way to make additional income. Not only another way but a smarter way.

First, before getting into a lot of stuff about investing we want to introduce you to some main terms you need to know. So I suggest you take out your notepad and write these things down so that you can study it as much as possible.

10 KEY TERMS ABOUT INVESTING

1. Ask- The sale price of a stock –
the lowest price a seller of a stock is willing to accept for a share of that given stock.

2. Bid- What a buyer pays for a stock,
the highest price that a buyer is willing to pay for a stock.

3. Bear Market- Time in which stocks drop in the stock market.

Prices fall and widespread pessimism causes the stock market’s downward spiral to be self-sustaining. Investors anticipate losses as pessimism and selling increases. If the market is a bull market that means the stock is increasing. Both of these types of markets are named after the way both of these animals attack.

4. Blue Chip Company- Company in which their stock maintains a solid history of growth on a consistent basis.

5. Bond- Issued through investors in order to grow capital.
A debt security under which the issuer owes the holders a debt and depending on the terms of the bond, is obliged to pay them interest (the coupon) and/or to repay the principal at a later date, termed the maturity date.

6. Broker- Middleman who gets commission from trades.
A regulated professional individual who buys and sells stocks and other securities for commission.

7. Dividend- Amount of money paid out by companies for stocks.
A payment made by a corporation to its shareholders, usually as a distribution of profits.

8. Mutual Fund- Money used from a fund sell to purchase new investments.
Investment strategies that allow you to pool your money together with other investors to purchase a collection of stocks, bonds, or other securities.

9. Portfolio- Assortment of investments someone owns.
A range of investments held by a person or organization.

10. Stock- Offer to buyers wishing to earn a percentage of a company.
The capital raised by a business or corporation through the issue and subscription of shares.

WHAT’S DRIVING YOU?

There are many ways you can go about making an investment. Including but not limited to putting money into stocks, bonds, mutual funds, real estate, or starting your own business. These options are more commonly known as investment vehicles. The term is just another way of saying “a way to invest.” It doesn’t matter which method you choose for investing your money, the goal is to always put your money to work so that you can increase your profit. Even though this is a simple idea, it’s the most important concept for you to understand. Take for example shows like Shark Tank. The expert panel are  business people that make their money from investing into other people’s business concepts. With whatever you do, you need a VEHICLE in order to get to a new location. So think about what vehicle may be best for you and remember that it’s okay and good to have more than one!

WHAT INVESTING IS NOT

Investing IS NOT gambling. When you gamble, you put your money at risk by betting on an unpredictable outcome, with the hope that you might win money. It is my understanding that a piece of the confusion between investing and gambling can come from the way some people use investment vehicles. For example, I have access to a Harmonic Scanner. Through the scanner, I receive day-to-day email giving information on available “hot stock” that WILL most likely make me money thus increasing my income. Whereas betting to win money in a casino does not guarantee that my income will increase .

True investing doesn’t happen without trial and error and action on your part. A true investor does not simply throw his or her money at just any investment.

Performing thorough analysis and committing capital only when there is a reasonable expectation of profit will make you one of the best investors on the planet. Understand that there still is risk, and there are not always guarantees, but investing is more than simply hoping Lady Luck is on your side.

When investing, find people who are actually getting results that can coach you in the investments you do pick. For example, before I start investing I always look into the systems track record as well as look into my broker’s track record to see the history of the investment.

Why Bother Investing?

We ALL know that everybody wants more money! It’s pretty easy to understand that people invest because they want to increase their personal freedom, sense of security and ability to afford the things they want in life.

It is important to understand that investing is becoming more and more of a necessity. The days when our grandparents worked the same job for 30-years and then retired to a nice, fat pension are long gone.

Yes, I said it… IT’S GONE!

For the average person, investing is used as a way that the person can retire and maintain their present lifestyle.

Whether you live in the free America, Canada, or pretty much any other country in the industrialized Western world, governments are tightening their belts. Interest rates are rising and almost without exception, the responsibility of planning for retirement is shifting away from the state and towards the individual. There is much debate over how safe our old-age pension programs will be over the next 20 or 30-years.

Seriously though, why leave it to chance? By planning ahead you can ensure financial stability during your retirement. Now that you’ve got the general basics of what investing is and why you should do it, it’s time to learn how you can leverage your investments.

And without further adue I present to you, one of the miracles of mathematics: compound interest…

Compound Interest

Most people don’t know what compound interest really is. “It’s GREAT, is what it is!” -Cain Edwards, an intern with the Fail to Success family said during one of our income increase discussions.

Albert Einstein referred to compound interest as “the greatest mathematical discovery of all time.” I think this is true partially because compounding can be applied to different aspects in everyday life.

Compound interest transforms your money into a state-of-the-art, highly efficient,  income-generating tool. Compounding is the process of generating earnings on an assets reinvested earnings. In order for compound interest to work, it’ll help to reinvest your earnings and time as well. The more time you give your investments to build wealth, the more you are able to accelerate the income potential of your original investment, which, in-turn, can relieve you from stress.

 
Compound interest transforms your money into a state-of-the-art, highly efficient,  income-generating tool. Compounding is the process of generating earnings on an assets reinvested earnings. In order for compound interest to work it’ll help to reinvest your earnings and time as well. The more time you give your investments to build wealth, the more you are able to accelerate the income potential of your original investment, which, in-turn, can relieve you from stress.

“Investing is a marathon; not a sprint. Be patient, because you’re not gonna get rich in a day.” -Ross Cameron

AND A TIP FOR INVESTING

When you invest, always keep in mind that compounding amplifies the growth of your working money. Just like investing maximizes your earning potential, compounding maximizes the earning potential of your investments – but remember, because time and reinvesting make compounding work, you must keep your hands off the principal and earned interest.

AND ON THAT NOTE..

“I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.” – Warren Buffett

Fail to Success realizes how important it is to be educated about investing and to have a place to put your money. One of the biggest problems isn’t that we don’t make enough money it’s that we spend all of the money we have. 

Click Here to learn more about one of the methods we use to put money to work for us. 

DISCLAIMER: This is not legal or investment advice, nor should you treat it as a substitute for legal counsel or the services of a certified financial advisor. PLEASE contact your financial advisor before investing or making any final choices.