Introduction to Investing
What is investing all about?
With this post let’s go right back to the very beginning of the ABC, DOE RAY ME of investing and let’s chat about what Investing is all about.
When we invest money, what our main objective is, is to buy something that you believe will give you a bigger return than if you had to keep your hard earned money in your bank account or in many cases under your pillow.
Let’s look at Investment return and the possible risk linked to that.
When we talk about investment return what we’re talking about is the possible profit that you can make in buying something at a certain price and then hopefully selling it later at a higher price. The profit that you earn on the investment is known as the return on the investment.
Have you ever heard of the phrase, high risk, high reward? With regards to any investment, you want to make the highest possible return as possible. However one must not forget that the investments carry different kinds of risks in order for you to make a return. The risk of the investment should be set up in line with the time frame you have to invest and your specific investment goal you’re trying to achieve.
So what is the best investment for you at the end of the day?
Well that is the million dollar question to be honest! But the important thing to keep in mind is that you always want to take as little risk as possible to achieve the investment return that you are looking for. How most people approach this is they look at random investments that give different returns. My philosophy is a little different, where I like to look at what your specific goal is and how and what return you need to achieve that goal. Once you have done that you can than determine what risk you need to take on the investment instead of just taking a randomly selected return.
Lastly you must also take your personality or your appetite for risk into account. You might be a person that does not like taking risks, so you also want to invest into something that you are comfortable with.
All Video Clips are supplied by Allan Gray
July 20, 2014
Grant van Zyl