Investment is a word that in recent years has become not only popular but also fashionable. But most people have little idea of what investment is. This is a process of the placement of capital for the purpose of making a profit. For making the benefit guaranteed, everyone can address to to invest in a long-term perspective with minimal risks.
Investment or speculation?
In the additional income market, there are two concepts that are very closely related to each other – investing and speculation. Every investor at least once in his life wonders which of these is more profitable.
Investing, in the classic form, means buying the best companies’ stocks and owning them as long as the companies remain the best in the market or bring the investor an acceptable return. The list of the «best» is formed according to the investor’s personally specified criteria.
Speculation is the purchase of currently undervalued shares to sell at a better price. The holding period of stocks can vary from one week to a couple of years, but more often it is 2-6 months.
It is not worth comparing the risk and profitability of classical investing and speculation, since they can completely depend on the knowledge and experience of the investor. Of course, speculation can give a much higher percentage of profit in a short period, but this is rather a one-time action and there is no talk about the long-term.
Of course, investing for the long-term or speculating is up to the investor, but as it turned out, many people are frightened by unconfirmed myths about investments.
Top-3 myths about investing
Today, a lot of rumors, legends, and myths have formed around investments, and it is worth delving into each one in detail to make sure that they are fake.
Myth#1. To become an investor, large start-up capital is needed
This is more a lie than a truth. Yes, some investments require a large amount of money. For example, real estate, precious metals, art, and others. But it’s possible to choose cheaper investments.
Of course, the investment with a small amount gives the proportional income. To get more benefits, it’s necessary to increase the amount of invested money. But the main thing in this business is to start.
Myth#2. To become an investor, economic education is necessary
This is not really necessary. Any person can become an investor. To do this, it is enough to know the basics of financial literacy, which will reduce costs and start saving money. Now there is a lot of literature on this topic and specialized Internet resources. Besides, there are training seminars in which everyone can be trained to manage the family budget and talk about investment opportunities in the country.
Myth#3. Invest in one instrument is more profitable
After investing all the money in one direction, the risk of capital loss increases. For example, there is an opinion that real-estate is the most reliable instrument for investing and many people buy an apartment, house, or something else with all their money. But it’s not the fact that real estate will bring income. The value of the immovables increases with inflation.
When real property prices fall, there is a chance to suffer losses on the entire amount of the investment, since all the money is in one direction.
Reducing risks is possible by distributing investments. This is the most important condition for effective investment. When forming an investment portfolio, it is worth investing part of the funds in instruments that will provide a guaranteed income – government securities, bonds, or bank deposits.
After all the myths have been dispelled, everyone can make sure that investment will help to get income from the accumulated cash without making a lot of effort and not spending a lot of time.

Print Friendly, PDF & Email