The Five Secrets That You Should Know About Investment

Philip Fisher once said, “The stock market is filled with individuals who know the price of everything, but the value of nothing.” Have you ever made an investment? Are you considering investment? If you have ever considered investing but don’t know where to begin with, let us spill some secrets for you and bust some myths in the process.

Saving money is not investment

Saving money and investing money are two distinct concepts with distinct goals and functions in your financial strategy. Putting money away in a safe, liquid account is saving. Investing is the process of purchasing an item, such as stocks, with the expectation of profit. Even if you have a strong portfolio, but don’t understand the importance of savings, you risk losing everything. Learn how to strike the right financial balance between saving and investing. This clarity will help your journey to building wealth and financial independence.

Invest in what you understand

Warren Buffet once said, “Buy stock the way you would buy a house. Understand and like it such that you’d be content to own it in the absence of any market.” However, the filings will make no sense when you don’t know how a company makes money. You won’t be able to forecast future cash flows until you know the company’s products, market, and competitive strengths and weaknesses. So, never put your money in something unfamiliar, just because you got a ‘word of advice’ and other people are making money out of it. Develop a plan just after you are certain about what you want to invest in.

Where there is reward, there is risk!

Dealing with volatility is a part of investing. Instead of fleeing the market in a panic, the wise investor views market downturns as opportunities to make tremendous investments. Benjamin Graham, the father of security analysis and value investing is someone that Warren Buffet speaks very highly of. Graham created “Mr.Market” , an imaginary business partner for investors. It highlights the necessity for investors to make rational decisions about their investment activities rather than letting emotions guide them. The market will fluctuate, sometimes dramatically, but instead of fearing it, utilize it to your advantage to find bargains in the market or to sell when your assets become significantly overvalued.

The money you earn needs a purpose

The key principle to help manage your personal finance is prioritization. This means you can look at your finances, figure out what keeps the money coming in, and stay focused on those activities. So, budgeting assists you in determining when and how you will spend your money. It’s fine to indulge every now and again as long as you have a strategy and can afford it. That power is given to you by your budget. Start making and sticking to a budget right away so you can stop worrying about money.

Self-investment is the best investment

You should invest in yourself if you don’t have enough money to invest in real estate or other high-return ventures. You may acquire enough money to invest in the things wealthy people invest in by investing in yourself — for example, by learning a skill for income generationNobody can take your knowledge away from you, and investing in your education and talents will always pay off. So what are some ways you may invest in yourself? Start reading, engage in networking events, sign up for a seminar, even better hire a coach!

Did we cover everything or miss out a secret that you know? If yes, then spill some tea!