One of the big differences between saving and investing is that by investing you are engaging part of your savings in hopes (which is not certainty) of earning some more money, which is fine, but every time you invest you will be accepting a risk , which does not happen with saving.
By investing you risk some of your money to get more money. This is one of the ways you have to make money work for you, even while you sleep, you’re on vacation or having dinner with friends; but investing is very different than playing roulette or any other casino game (where chance intervenes), so you have to do it with intelligence. To invest wisely it is not enough to have luck or intuition; you must also have a reasonable expectation of profitability, which depend on the quantity and quality of the information you have about the investment and the judgment with which you draw conclusions from it, besides the risk you are willing to take.
Even with the uncertainty and the risk involved, smart investments will grant you more control of your money and the financial independence you’ve always wanted, but never forget that by investing you will be using some of your savings and therefore, you are compromising your financial capacity.
Always invest wisely, and never risk money you need to pay immediate or short-term obligations.
Many times we complain about not having enough money to cover our monthly expenses; it seems that we never have enough money, because the greater the amount entered in our bank account, the faster we spend it.
Although the issue of money is a sensitive subject for most of us, it is very likely that we are unaware of what we spend, or do not know for sure what we do with our money (we just realized that we no longer have it ), and those little recurring and regular expenses are the main routes where it escapes from us. Unnecessary purchases, unnecessary expenses, certain habits and certain social compromises, undo our pockets allowing our money to “Drain”, significantly reducing our ability for saving and investing.
If you take out your pen and play around with the numbers, try to calculate what you spend on coffee, bottled water and cigarettes; sum the monthly payments you make when you invite your classmates or workmates; try to calculate all the money you spend making small purchases of what you like or what attracts you, even when you don’t really need them.
It is not about depriving yourself of the things that please you, but to become aware of what you do with your money and the need to preserve some leeway that allows you to handle unforeseen situations.
If you want to prevent your money from leaking, try to get enough discipline to stop eating at fast food restaurants, reduce your consumption of coffee and cigarettes; have fun with outdoor recreational activities such as parks and rides that do not require large outlays of money activities. If you go to the movies, think about what you spend on popcorn and soda (these costs are quite significant). Try to go to work on foot or by public transport, and attempt to reduce the use of your own vehicle to avoid payments for fuel, parking and even an occasional fine which you would be exposed to.
And if you go to groceries stores, do it after eating; that way you can resist the lure of buying what you do not need, or purchasing too much (remember that the more you earn, the more you consume). Of course, avoid buying items for their beautiful packaging, as well as articles and magazines that are on the waiting lines of the cashiers (if they are there, it’s because they are not really needed).
In short, start identifying the small holes from where your money is escaping. You may be surprised when you see that without realizing it you’re losing up to 30% of your salary, and that that amount can be used far more intelligently to reduce some of your debts at your own pace, and make investments that increase the value of your money.
Do not settle for learning just the basic fundamentals of investment. Strive to learn something new every day.
Have you ever wondered what’s the reason you have not yet invested in the stock market? There may be many answers: “It has never interested me”, “If I don’t have enough money for monthly expenses, less I have it to invest”, “I know a friend who invested all their savings and lost them”, “I don’t like the idea of investing because I’ll only see profits after many years”, “I don’t trust anyone with my money”, etc. The truth is that people don’t dare, and if they do, then they may be tempted to quickly withdraw the money they have invested because they think they will end up losing it or that it could be intended for something more useful.
The investment road can be long and tortuous, but the final results will be worth the effort. The “wood” that an investor is made of can only be shown after a few years; therefore, to learn the art of investment, we must understand the way of thinking of those who have persevered to achieve their goals, and they all focus on the long term and invest in companies managed by honest people, with transparent business models, comprehensible and of course, with attractive prices and favorable prospects. Successful investors such as Warren Buffett or Peter Lynch, do not use large formalisms to make their investments, nor deal with macroeconomic analysis or detailed technical reports. Do not settle for learning just the basic fundamentals of investment. Strive to learn something new every day; they have mastered the art of investment, but if you are just taking the first steps, you should consider some tips so you start off right and so your intent to travel the long road of investment will not remain only as an attempt.
If you are already convinced that to succeed in investments one must make decisions wisely, you will have to learn from the best, and for that you don’t need to travel to Tokyo or New York to attend expensive seminars; you can learn from them by reading books and articles written by people with weight in the world of finance; for example Benjamin Graham, author of a wonderful book entitled “The Intelligent Investor”, in which the foundations of something very interesting called Value Investing are explained; in this book you will understand the art of long-term investing maintaining a margin of safety. You can also use multiple forums, blogs and social networks, where besides of meeting new people with similar interests, you’ll find good investment ideas.
But one thing is to learn the basic fundamentals of investments, and quite another is to master the art of investment; this requires much more time and effort of constant learning. Combining theory and practice is essential for good results; therefore, allow yourself to make some mistakes; any error can and must become a learning experience and as one learns to walk without falling, you must be consistent and reject the idea of abandoning the path; remember that you’ve failed the moment in which you decide to give up. A good way to not fall into the temptation of giving up and to not get out of the road at the first difficulties is to establish specific targets at very short notice, for example, weekly analyze a company listed in the S&P 500 or the Dow Jones. You can also commit to do daily monitoring of fluctuations occurring in certain stock market, and try then to find the causes that might explain these variations in prices, if you prefer, you can set as weekly target reading a specialized newspaper in economics and finance or gather market information of interest to understand and exchange reviews with other people with knowledge in this field.
Reached this point you may have noticed you need the discipline to stay on track with your investments. Perhaps you’re thinking this is not for you, but keep in mind that every beginning is a challenge and you’ll get more and more excited as you go taking the first practical steps.
Dare to invest and do it with common sense.
If you want to start playing at the world stock market, the “blue chips” could be a good investment option
No wonder that a significant number of investors prefer to operate with the so called Blue Chips. This tems, which referes to casino blue chips (which are those that represent more value) is used in the stock exchange world to identify stocks of stable companies, financially solid, well-established and with products or services with good acceptance. Typically, blue chips correspond to the stocks of financial institutions globally recognized, as well as the leader multinationals in sectors like energy and telecommunications.
The shares of these businesses are very attractive to investors for their reliability, the evolution of the price is uniform, remaining stable to market swings; Blue chips can be traded when desired and, sometimes, payment of dividends (shareholder earnings) is done on a regular basis even though the company is not going through its best moment.
A good way to understand the blue chips is considering them as the premium stocks in the market: stable, with predictable yield (although lower than others) and with little financial risk, making them ideal for conservative investors, cautious and with little tolerance for uncertainty and risk.
As is to be expected in any investment, profitability is proportional to the risk; in the case of the blue chips, profitability is fairly low and due to high demand, these stocks tend to have higher prices, so they are not attractive for those who want quick profits; however, they are a good way to start playing on the market.
Had you ever thought about being a shareholder of a large bank? By buying blue chips, you are not only taking your first steps into the world of investments and getting dividends from time to time, but also, you will be owner of a small part of that business; a very small part, but that is the starting point.