Before we start to invest, there several questions that we need to address. Let’s apply the rule of What, Why, When, Where, Who, How
What is investment?
An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price.
Why invest ?
A few people may stumble into financial security. But for most people, the only way to attain financial security is to save and invest over a long period of time. You just need to have your money work for you. That’s investing.
There are some ways your money can work for you:
When to invest?
As soon as a person has some savings, that’s the right time. The great investment guru, Warren Buffet started investing in his teens. Always start small. Take your time to read and learn about invetments tools and their returns. Also don’t forget the risk factors involved. Sometimes if you waited too long just to save a larger amount, the timing may not be right.
What to invest?
First and foremost, is, to invest in yourself. Get the proper education on investments, go for short courses, learn from experienced people around you. Read everything you need to know about the potential investment that you are about to make. Never invest in something that you do not know, do not understand and do not like. You will only have yourself to blame if things did not work out.
Who to invest with?
Private bankers are rare and they only work for high net worth individuals. But, there are also young guns who had just graduated with brilliant ideas. These people work in investment or brokerage companies that can provide you with great investment ideas. Do not think that inexperience is a handicap. You will never know if the twenty something guy is a Warren Buffet in the making.
How to invest?
Very simple. First of all, get all the necessary information, shop around a few brokerage or investment companies. Then when you are ready, plunge your dough. Most investment products are passive and takes a considerable time to consider substantial profits. There are also some products that requires you to be active and see almost immediate results.