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What investing is and is not

clip71731932.jpgWhen you invest your money, you are really committing your financial resources to another entity with the hope that in time you will gain more income than you initially invested.In other words, you assume that by investing money now, you will benefit from a profit later.When you invest you want your money to work for you.Investing is very appealing to most because it is a way of making money without having to do the hard work that is associated with having a job.In the real world, the only way to make more money is to work harder or longer.This is not the case with investing.When you invest wisely, it's like working two jobs and earning the additional income all at once.Through investing, you maximize your earning power.

You have a lot of different options when it comes to investing.You can choose to invest in stocks, bonds, mutual funds or in a number of alternative investments which include investing in real estate or in the FOREX (to name just a few).Some people choose to start their own business and this is certainly one of many ways to invest.Every type of investment has a different degree of risk associated with it.Bonds are secured by the government and are therefore considered one of the safest types of investments.On the other hand, bonds are also one of the lowest yielding investments.So while you are guaranteed a return, you will not get rich off of bonds.Stocks are at the opposite end of the risk spectrum.While you run the risk of losing all of your money when you invest in a stock, your potential for making a lot of money is at least a possibility, a possibility that really pays off for some.The concept behind investing is simple, have your money work for you, but many people have misconceptions about what investing is and is not.

Many people see investing as a way to get rich quick, but investing is not gambling.When you gamble, you throw you money into a game or other high risk venture and simply hope that you will make money.Investing is much more calculated.A smart investor performs analysis and commits money based in credible information and research.Investing is committing your money to something that has a reasonable expectation of increasing in value.Yes, there is still a risk involved, but there are no guarantees for just about anything in life.When you make a wise investment you are relying on all the effort that you put into your investment decisions not just on luck.

For young people, investing is often viewed as a way to make more money, to increase their financial freedom and to be freer to afford the finer things in life.It is not until retirement age gets closer that people really start to realize how much of a necessity investing early in life is in assuring comfort and security past retirement age.For the average person, the prospect of receiving a pension upon retirement is unrealistic; investing is the only way to maintain your present lifestyle once you retire.Investing is even more important than ever because of the current economic situation.With job security lower than it has been in a long time, people are looking for ways to push their dollar to the limit.Planning for retirement was once something that the government or an individual employer took care of, this is no longer the case.Unless an individual puts forth the effort themselves, retirement may not be a possibility.By planning ahead and learning how to invest now, you can start making your money work for you.


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