Keep INVESTING Simple and Safe (KISS)
****Investment Philosophy, Strategy and various Valuation Methods****
The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.
The Basics of Personal Finance Investing: Stocks, Bonds, and Short-term investments.
Overall, investing is a great way to build wealth or a 'nest egg' for your retirement. If you invest regular amounts of money on a consistent basis over a long period of time, you are more likely to be successful in reaching your financial goals. By knowing just a few investing basics, you can get started with a variety of income options.
Three Types Of Investments
There are three basic types of investments you can choose from. There are stocks, bonds, and short-term investments.
Stocks can also be referred to as equity investments. These are investments in individual companies that are publicly held. Stocks allow you to hold a small ownership in these companies. When invested in long-term, stocks have a high potential for growth. Stocks are not without risk, however. If the price of the stock drops, so do the investor's earnings. If a company goes out of business, the owners of the stock can lose their entire investment. It is wise to invest in the stock of companies that have been around for a very long time and that have a track record of rising stock prices.
Buying a bond is basically lending money to the company you are purchasing it from. An example of this is buying a bond from the U.S. Treasury. After purchase a bond, you would be paid back after you cash it in. Buying bonds has the potential to increase your wealth with a lower risk than purchasing stocks, as well as the benefit of having a bit of protection from economic inflation.
Short term investments can include money market investments, certificates of deposit (CD's), and others. After a short period of time, you can earn interest on these investments. You can usually begin receiving interest in as little as one year or less. These short-term investments are much less risky than stocks and bonds, but there is lower potential for growth. This means you can not expect as large of a return on a short-term investment as you could from stocks or bonds.
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The Basics of Personal Finance Investing
By Richard MacGrueber