I have been talking with many people about investing and investment strategies. In these conversations, I am finding that so many people are in debt which makes it hard to invest because they are living from paycheck to paycheck. For those of you who are in debt and living from paycheck to paycheck, I suggest that your main focus should be to start paying down debt to become debt free and then review the following. My goal with this article is to increase your knowledge about investing and to get you to begin asking questions so that you better understand investing.
The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to want.
What is Investing?
Investing is the act of committing money or capital to an endeavor with the expectation of obtaining an income or profit. Most importantly its how you make your money grow over time. Finally, investing is appreciating your current assets to meet long tern goals. Over the years I have found that if you spend less than you earn and then save and invest the difference over a long period of time you will become a successful investor.
8 Must Ask Questions Before You Invest
When I was a Financial Advisor several years ago, I would ask my clients the following questions to get a better understanding of their knowledge on investing.
What is my financial objective? What do I plan to do with the money? When will I need it?
What’s my risk tolerance? How upset will I be when my investments hit a rough patch?
Am I ready to hold the investment for a while? Investing is a long-term relationship. Successful investors stick with their choices for 5, 10 or 20 years.
Do I understand what I am buying? If you don’t understand the company’s products or services and how it makes money, don’t invest in it.
Is This a good or too good price? How does the current price compare with its past price with similar investments? Something that seems to good to be true probably is
What is the company’s outlook? Are there any trends that could boost or diminish the company’s products or service? Does the company itself have any issues that could impact future profitability?
What are the cost? Check out fees, commission, and expenses. The more cost you pay to acquire the asset the less money you make
finally ask yourself Why am I buying it? If you can’t answer this question, then you should not buy it.
Next week I will review some investment strategies that will help minimize investment risk while providing a high return.
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