Investing 101 – What’s it All About?

Ok so this article is reserved for those brand new investors out there who have decided to take a stab at managing their own savings but have absolutely NO IDEA where to start. As we go along I’ll basically give you a general idea of what investing is all about and what to expect.

In few words…”If done right, investing is like playing at the casino in slow motion without losing while watching Young and the Restless.”

It’s full of excitement, suspense, drama and sometimes disappointment. Similar to the games you play in a casino, there are many different ways you can invest your money. Now don’t get the wrong idea, INVESTING IS NOT GAMBLING… it’s the ability to make highly calculated low-risk investment decisions in the hopes of obtaining a profitable return.

Take for example a game I once played called “Sic Bow”. Basically, there are three dice in a clear plastic dome which are then shaken and put on the table to reveal three numbers. Prior to shaking, people have the option to place bets on a variety of choices. You can bet on what you think the sum of all the three dice will be, whether or not it is a high number (above 10) or a low number (10 and below), select a range of numbers etc. Depending on the type of bet you made, and how risky it would be to win that bet, would ultimately determine the amount of money you would make. The same thing goes for investing.

The main difference lies in the mechanics of how the game is played. You are not betting on something ruled strictly by chance, you are investing in something based on facts and figures which indicate the direction of that chosen investment. As a result, you dramatically reduce the level of risk involved and increase your chances to profit. Now making a “substantial” profit doesn’t always occur within a matter of minutes – although it can and does happen – it usually happens in a matter of days, months or even years depending on what type of investment your making.

Similar to the variety of games in a casino, there are tons of options available to you. You can invest in the stock market (companies), natural resources (gas, oil etc.), commodities (rice, corn, sugar etc.), precious metals (gold, silver, copper etc.), currencies (US dollar, yen, euro etc.), countries and a lot more. You can invest in a general direction of a market, whether you think it will go up or down. If you don’t want to pick a particular company or resource, you can invest in a group of them. The options are endless. It doesn’t matter if your a beginner or an expert, there are all types of investments that can achieve profit in any scenario.

So how does watching “Young and the Restless” relate to investing? Well, like gambling, investing can be a very emotional roller-coaster ride. There will be ups and downs and when you have your life savings is on a ride like that you tend to get nervous. This is very common as a beginner and even later as an experienced investor, but you need to stay focused on the END RESULT. When I invest, I research, plan, estimate, predict, compare, confirm, reconfirm and then buy. Once your confident of which direction a market will go, the only question left to answer is when will it get there? Unfortunately, that is one question investors really can’t answer. Based on past projections, you could estimate a probable range in which that investment will reach your target goal but it’s never 100% accurate.

So when you invest, know where the market is going, and focus on reaching your final target. Don’t get flustered when you see major fluctuations in the value. The drama that is the stock market – or any other market for that matter – can be very emotional and sometimes entertaining. Just buckle up and enjoy the ride.

Leave a Reply

Your email address will not be published. Required fields are marked *