Money: Wealth, Investment, Human Capital, Success. A Gold Mine On How To Make More Money by Jubi Gloria & Odame Paul

Author:Jubi, Gloria & Odame, Paul [Jubi, Gloria]
Language: eng
Format: epub, azw3
Publisher: Litmux.com
Published: 2020-05-22T16:00:00+00:00

Chapter 6

Investment

It's actually pretty simple: investing means putting your money to work for you–actually, it's a different way to think about how to make money. Growing up, most of us were taught that you can earn an income only by getting a job and working. And so that's what most of us do. But there's a limit to how much we can work and how much money we make out of it–not to mention the fact that having a bunch of money is no fun if we don't have the leisure time to enjoy it.

An investment makes money in one of two ways: By paying out income, or by increasing in value to other investors.

Income comes in the form of interest payments, in the case of a bond, or dividends, in the case of stock. Interest payments on bonds are meant to be steady and reliable—when a bond doesn’t meet its payments, it is in default. Stock dividends can and do vary. A company has no legal obligation to pay out a dividend, and may have to cut it if earnings fall. On the other hand, unlike with a bond, businesses can raise their dividends when times are good.

Most investments are also traded on the market, so that means their value, if you tried to sell them, can rise or fall every day. The most familiar example is with stocks: If other investors see good prospects for higher company earnings or fatter dividends, they may push the price of the stock upwards. Or they may just sense that other investors are feeling more optimistic, and buy simply on the hopes of riding an ebullient market. Likewise, bad news or investors’ bad moods can force prices down.

So, since you cannot create a duplicate of yourself to increase your working time, you need to send an extension of yourself–your money–to work. That way, while you are putting in hours on a daily basis, sleeping, reading the paper, or socializing with friends, you can also be earning money elsewhere. Quite simply, making your money work for you maximizes your earning potential.

There are many different ways you can go about making an investment. This includes putting money into real estate, gold, stocks, bonds, mutual funds, etc. The point is that no matter the method you choose to invest, the goal is always to put your money to work so it earns you an additional profit. Even though this is a simple idea, it's the most important concept for you to understand.

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 friend’s advice and not an expert is essentially the same as placing a bet at a casino.

A 'real' investor does not simply throw his or her money at

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