This is Part 2 of a series of articles that I will be writing. In case you have missed out Part 1, please read the article at http://www.investment-in-stocks.com/financial-intelligence/passive-income-101-part-1-how-you-too-can-be-financially-free before you continue to read.
Done reading the above article?
How should you get started now. I will provide some simple steps as a guide for you based on my personal experience:
Step 1: Which area of investment interests are you passionate about (Eg. Stocks, etc.). This interest will sustain you in a long run since we are investing long term.
Step 2: Are your investment interests able to generate more Return of Investment (ROI) than the inflation in your country? If not, search for another investment vehicle.
Step 3: Are you educated in your investment interest to a level that you are willing to put your hard-earned savings into it and you can sleep peacefully at night without worrying? If not, get the knowledge first. You may register for a FREE ‘How to Achieve Financial Freedom Using Only 15 Mins Per Month’ Workshop at http://www.investment-in-stocks.com/free-masterclass/.
On this article, our focus will be in investing in Stocks or Shares to help you achieve your financial freedom.
Before I start, I am going to assume that you are a new in this area. As such, I am going to use very simple terms. Get ready!
In simple terms, a holder of stocks (a shareholder) is an owner of a company. Ownership is determined by the number of shares a person owns relative to the number of outstanding shares. For example, if a company has 1,000 shares of stock outstanding and one person owns 100 shares, that person would own and have claim to 10% of the company’s assets. This leads to our Secret #2.
SECRET #2 – Stocks are businesses, NOT numbers in the stock charts
Most investors or people who claimed that they are investors looked at share prices every day, every week or every month thinking that they are monitoring the stocks. May I ask you: “If you are buying a business, do you want the business to make money or lose money?” The answer is obviously YES.
However, how many people out there who are buying/selling stocks truly knows what are they buying? Is the company that they are buying making money? Unsure? Then you are speculating.
If you are just looking at the fluctuation of the share price every day, then you are speculating.
Do you dare to put your entire savings into that company and you are able to sleep peacefully at night? You can’t? Then you are speculating!!
REMEMBER! In order to protect your hard-earned savings, you MUST see stocks/shares as a business and NOT just numbers fluctuating on the chart which leads us to SECRET #3…….
SECRET #3 – Invest, DON’t Speculate
So what is REALLY the difference between Investing VS Speculation. An INVESTING attitude is that you invest in an asset and you look at the returns that the asset is giving you. Eg. If you invest in a Coca Cola, you want to know how much money is this company bringing you, versus looking at the price regularly without knowing about the asset, that’s pure SPECULATION.
So which one works better, Investing OR Speculation? Look at the most recent Forbes Richest List at http://www.forbes.com/wealth/billionaires/list where it list down the current Billionaires. Focus on the TOP 10 and ask yourself this question: “Are there any investor or speculator in the TOP 10?” The answer is YES, there is an investor by the name of Warren Buffett but no speculators. If the Wall Street speculators are really that spectacular, why aren’t they in the Forbes List? We can infer one thing – an INVESTMENT attitude works, simply because results tell the truth.
By the way, Warren Buffett started investment in stocks as young as 11 years old and he is now 81 years old. 70 years of solid investment wisdom with a current networth of US$50 Billion. So is he just lucky for the past 70 years or is he skillful? If he is really that skillful, how did he do it?
In the next few part of this series, I will share with you how he does it. A SNEAK PREVIEW is available at www.facebook.com/valueinvestingacademy. “Like” us and get 2 Investment EBooks and Our Exclusive Interview with Mary Buffett.
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Founder & Director, Mind Kinesis Management International
Lifelong Learner Award 2008 Honouree
Co-author, “Do You Have What It Takes To Be BOSS?”
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