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The Ultimate Guide to Profitable Investing
Dear reader,
At first, what this man unboxes live on camera will confuse you
But then, it will start to sink in… And your life may never be the same.
Investing is one of the most common ways of wealth creation.
It involves placing money on an asset with the intention of allowing the money to appreciate in value.
The wealth or income realized from investing can be used to accomplish several objectives such as saving up for retirement, going on a vacation, meeting shortages in income, repayments of loans, buying other assets, and paying tuition, among others.
A proper understanding of the investment processes will enable you to select the right instrument to meet your financial goals.
Investments can generate revenue for you in two major ways.
One, investing in saleable assets will help you raise income through profit.
Secondly, investing in a return generation plan will enable you to earn income through accumulating gains.In this sense, investment involves placing your money on objects or assets that increase in value more than their original worth with time.
Therefore, investing involves purchasing an asset or security with the intention of letting it appreciate over time and making a profit off the accrued value.
Relationship Between Investment and Savings
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Savings and investments are often used interchangeably due to their shared similarities.
Savings consists of setting aside a part of your income or earnings for future usage.
The amount that is saved is not subject to any risks, unlike an investment that is subject to market forces.
Savings do not earn profits or returns; however, their value appreciation remains stagnant since there is no addition above that which you add every month.
On the other hand, investing is based on the concept of earning profits or returns on money placed on an asset purchase.
What makes it profitable is the element of risk which influences the asset's appreciation or depreciation.
Therefore, the higher the risk involved, the higher your chances of earning greater returns.
This is why it is always advised that potential investors check their risk appetite while investing.
The Importance of Investment
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1. Safe Preservation of Money or Capital
One of the major objectives of investing is capital preservation.
Investing in assets helps investors to keep their hard-earned money safe from being eroded over time.
By putting their funds in these instruments or securities, they get to preserve their money for future expenses.
Some common types of investments that can allow you to keep your money are government bonds, fixed deposits, and savings accounts.
While the returns on these types of investments are relatively lower, they help you attain your investment objective by keeping your money safe.
2. To Grow Your Money
Another objective or importance of investing is to help grow your cash into a sizable amount over time.
Capital appreciation is one of the major long-term goals of persons looking to secure their financial future.
To ensure that the money you earn increases in wealth, it is important to look for investment instruments that will provide you with significant returns on the original amount invested over time.
While the risks associated with these investment options are generally high, their investment returns are significant.
3. To Have a Steady Stream of Income
Investments can also serve as a steady source of primary or secondary income.
Examples of such investments include fixed deposits used in paying out the regular stocks or the interests of organizations that consistently pay investors' dividends.
Income-generating investments also help investors pay their daily expenses after they have retired.
4. Saving Up for Retirement
Investors also have other compelling reasons for investing in assets besides capital preservation and capital growth.
Saving for retirement is another crucial objective for investing.
Everyone dreams of a retirement period free of work and riddled with vacations and outings.
Therefore, it is important to have a retirement fund that you can conveniently fall back on during your golden years without having to work.
One of the ways to achieve this dream is by making your money work for you by investing them in invaluable assets.
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5. To Meet Your Financial Targets
Investing in securities helps you meet your short-term and long-term economic goals without much trouble or stress. Some investment options come with high liquidity and short lock-in periods.
These investments are perfect instruments to store your funds in if you wish to achieve short-term objectives like funding your home improvements or generating an emergency fund.
Other investment categories with extended lock-in periods are suitable for saving up for long-term goals.
The Principles of Investing
Wealth creation is a marathon race that involves the observation of certain fundamental tenets or principles to achieve.
These principles serve as roadmaps or guides towards having a successful investment experience.
hether an expert portfolio manager or a rookie investor, some fundamental principles are indispensable guides in your investment journey.
They include the following:
1. Risk and Opportunity
One of the major principles of investing is risk and opportunity; these two concepts are integral to investing and go hand in hand.
They increase or decrease in relation to each other.
Investments that possess a higher profit potential also bear corresponding levels of risk.
In contrast, investments that offer limited potential for return on investment or ROI conventionally possess limited risk and greater security.
Some investments like a certificate of deposit or CD typically offer reduced rates of returns.
This type of investment is suitable for persons with very low-risk appetites or tolerance who are more interested in preserving their investment capital instead of growing it.
In contrast, investments such as equities have rates of returns of up to 10% or more per annum but also possess greater amounts of risks.
There is, however, no guaranteed return on the equity you are investing in.
Because of the relationship between potential returns and risks, it is crucial for investors to carefully examine their levels of risk tolerance while choosing their investment.
This is because the amount of risk an investor is capable of bearing is directly related to the opportunity to general a given amount of profit.
2. Properly Evaluate the Purpose of the Investment
It is important to examine the purpose or nature of your investment.
Only take out investment in assets that you have an excellent understanding of.
However, this principle does not mean that you should invest only in industries or areas you have expertise in.
However, it is required you know how a given investment functions or operates.
When taking out investment in an industry or a company, you should endeavor to understand the workings of the company's business model and the way it raises income.
For instance, logistics firms carry out transport costs and storage, while e-commerce firms depend on the conversion rate and shopping cart size.
The same goes for financial products.
Therefore, if you do not have a sound comprehension of how the company works, staying off it is only advisable.
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3. Invest for the Long-Term
Another principle of investing is making an investment with a long-term mindset.
Investors who only wish to make quick profits often face the danger of losing all their cool due to fluctuations in exchange rates leading to high losses.
Therefore, investing in assets you wish to keep for the long-term is recommended. According to renowned investment guru, Warren Buffet, the maximum holding timeline for stocks is "forever".
The longer an investment period, the higher the potential for an increase in the compound interest of the original worth your investment.
Short-term investments rarely possess high compound interest returns, which makes no difference in the earnings; however, longer-term investments show a considerable impact.
Therefore, the most common stocks preferred for long-term investing are high-growth stocks.
4. Fundamental Analysis
5. Diversifying Your Portfolios
One of the most common pieces of investment advice is never to put all your eggs in one basket.
Instead, ensure that your portfolio's risks are spread out as widely as possible by investing in securities from various industries or sectors with different return ratios and varying risks.
This is known as the principle of portfolio diversification.
It is designed to help limit the risk present in the whole portfolio.
A diversified portfolio includes investments that possess the littlest possible similarities or relationships with each other.
In the occasion of an emergency or a crisis, not all your assets will reduce in value simultaneously.
For instance, avoid placing all your capital on health stocks because your entire portfolio will lose its value if there is an emergency or industry crisis.
Therefore, endeavor to invest in securities stocks from different aspects of the economy that are not mutually dependent on each other.
Also, diversification should be implemented across different asset categories.
6. Avoid Following Trends
Psychology plays a key function in investing.
Therefore, caution is always recommended when the industry is witnessing a boom, and avoid panicking during times of crisis; instead, think of valuable purchasing opportunities.
Many companies and organizations become undervalued during these times despite raising profits and having a healthy business model.
Successful investors are known for making logical decisions every time and avoid running dominating trends or making investments in assets simply because everyone has rejected them.
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Types of Investments
When it comes to investing, there are lots of options to choose from.
However, it is essential to understand all the investment options before proceeding to invest your funds and build your portfolio.
Furthermore, each type of investment comes with its upsides and downsides.
The best form of investment to take out depends on your understanding of the market, risk tolerance, the timeline for investing, and reasons for taking out the investment in the first place.
1. Stocks
Stocks are among the popular types of investment; companies sell their stocks to generate funds for their business operations.
A stock represents ownership of a firm or company; purchasing stocks gives you partial ownership of the company and enables you to partake in the gains and losses of the company.
In addition, stockholders have certain rights in the company, such as the right to vote on issues and buy and sell shares through a stockbroker and a stock exchange, which are marketplaces for stocks.
Stocks are renowned for their high volatility rate, meaning their value can rapidly rise or fall.
Owning different stocks helps to balance out this risk.
In addition, some categories of stocks allow investors to earn dividends which are payments realized from the company's profits.
Some of the major classes of stocks include domestic stocks, large-cap stocks, growth stocks, preferred stocks, international stocks, mid-cap stocks, and small-cap stocks.
2. Bonds
Bonds are safer investment options than stocks, and they allow companies and countries to generate capital by borrowing funds from investors through issuing debts known as bonds.
When a person invests in bonds, they loan funds to the issuer for a specific time.
The issuer pays the lender a fixed rate of return alongside the original sum loaned to them in return for their loan.
Upon the conclusion of that period, the bond issuer pays back purchase prices and the interest on the bond.
Bonds are recognized as fixed-income investments because of their fixed rates of return and are generally less risky than stocks.
However, not every bond is a safe investment; some are issued by firms with poor credit ratings, which means there is an increased chance of the firm defaulting on their repayment.
3. Real Estate
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4. Commodities
Commodities are another class of investments typically comprised of energy and metals, agricultural products, precious metals, etc.
These assets are made up of raw materials used in industries, and their prices depend on the market forces of demand and supply.
For instance, if a natural disaster such as a flood affects the rice supply, the price of rice would increase due to scarcity.
Purchasing physical commodities means taking possession of quantities of gold, wheat, oil, and other commodities. Investors, however, do not take possession of commodities using the mechanism; rather, they purchase commodities through options contracts and futures.
You can also invest in commodities using securities such as ETSs or purchasing the shares of the companies that manufacture commodities.
Commodities can be moderate to high-risk investments and often left to experienced investors.
Other types of investments include mutual funds, index funds, exchange-traded funds, and options.
How to Invest in Assets
After deciding on the class of asset you wish to invest your funds in, the next stage is the investment process. below are valuable steps involved in the investment processes:
1. Decide on the Amount of Money You Wish to Invest
- Your present after-tax income: Most people consider their before-tax income while taking out their investment sum. However, it is recommended to only invest with the amount left after your taxes to help you build a realistic budget.
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Overall debt: Another factor to consider here is the amount of debt you presently have. Enumerate your monthly payments and compare them against the sum you are earning.
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Net worth: Your net worth refers to your total assets minus liabilities. This figure gives an idea of your financial position and lets you see the bigger picture of your financial health
2. Open an Investment Account
3. Invest for the Long-Term
Stock market investments are some of the best techniques to grow long-term wealth.
Investing long-term ensures maximum returns on securities while reducing the risks of losses.
The minimum stock market return is set at 10% per year; however, some years might witness an increase in stock value while others may not.
The best assets to invest in for maximum long-term profit are high-growth or high-value stocks of companies.
Industries with high-growth stocks include e-commerce, streaming services, entertainment, shipping, renewable energy, etc.
3. Properly Manage Your Portfolio
Avoid fretting over periodic fluctuations in stock valuations as this is one of the key attributes of the investment industry.
However, ensure that you periodically check your stocks and other investments.
In addition, it is recommended that you pay close attention to geographical diversification.
Conclusion
Investments are some of the most standard ways to generate capital for both short-term and long-term purposes.
However, investing requires observing certain essential and crucial guidelines such as those discussed above. These will help to make your investment a huge success.
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"My First Impression Was 'You've GOT to Be KIDDING Me!'"
In this jaw-dropping video clip, hear THE FOUR SHOCKING WORDS that will help SUPERCHARGE AMERICANS' RETIREMENT in 2022 and beyond... REGARDLESS of divisive politics... record-high debt... even the pandemic!
Resources and References:
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The Importance of Investment
https://www.allbusiness.com/top-10-reasons-to-invest-money-93916-1.html
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The Principles of Investing
https://guardian.ng/business-services/money/9-fundamental-principles-that-one-must-follow-while-investing/
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Types of Investments
https://www.nerdwallet.com/article/investing/how-to-start-investing
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How to Invest in Assets
https://www.businessinsider.com/personal-finance/how-to-buy-stock?r=US&IR=T
https://blog.upskillist.com/how-to-invest-your-money-the-essential-guide-to-profitable-investing/
insider@investorbeam.com | 265 Hackensack St Unit #1064, Wood Ridge, NJ 07075.
*This manual is for informational and entertainment purposes only. The author is not an investment adviser, financial adviser, or broker, and the material contained herein is not intended as investment advice. If you wish to obtain personalized investment advice, you should consult with a Certified Financial Planner (CFP). All statements made in this manual are based on the author's own opinion. Neither the author or the publisher warrants or assume any responsibility for the accuracy of the statements or information contained in this manual, and specifically disclaims the accuracy of any data, including stock prices and stock performance histories. No mention of a particular security or instrument herein constitutes a recommendation to buy or sell that or any security or instrument, nor does it mean that any particular security, instrument, portfolio of securities, transaction or investment strategy is suitable for any specific individual. Neither the author or the publisher, can assess, verify, or guarantee the accuracy, adequacy, or completeness of any information, the suitability or profitability of any particular investment or methodology, or the potential value of any investment or informational source. READERS BEAR THE SOLE RESPONSIBILITY FOR THEIR OWN INVESTMENT DECISIONS. NEITHER THE AUTHOR OR THE PUBLISHER IS RESPONSIBLE FOR ANY LOSSES DUE TO INVESTMENT DECISIONS MADE BASED ON INFORMATION PROVIDED HEREIN. At the time of writing, neither the author or the publisher has a position in any of the stocks mentioned in this manual. By proceeding with reading this course, you affirm that you have read and understand the above disclaimer.
Disclaimer - Forex, futures, stock, and options trading is not appropriate for everyone. There is a substantial risk of loss associated with trading these markets. Losses can and will occur. No system or methodology has ever been developed that can guarantee profits or ensure freedom from losses. No representation or implication is being made that using the methodology or system or the information in this presentation will generate profits or ensure freedom from losses.HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.