Invest in these things (Part 3 - last part)

in #investing6 years ago

This is last part (Part three) of a series of post, which previous ones are:

If you haven't read them, please do it now and I will appreciate your time and comments.

Investment

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image source
Economist simply define investment, the act of allocating some of your money in activities which are expected to bring you some benefit in future, which financially we call them return on investment. Buying anything which keeps your main asset safe and is expected to rise in its value, is investment; like buying durable goods, real estate etc

Investments often rising in value because of below reasons:

  • inflation
  • scarcity of the resources
  • added value

Rule no.1

Riskier the investment is, higher return is expected

Rule no.2

whatever is not measurable, is not manageable; So an un-measurable and un-determinable risk, is not financially right and is considered gambling not investing.

Rule no.3

Diversification is the key to protect your asset in long run. Do not put all your eggs in one nest.

Having above three rules, we can have a sense of what will be considered a "what to invest in" list nominee. So let's read my investment options:

Stocks

Whether if you are living in a developed country, or in an emerging market, or even in an developing country, you should have some stocks for long term investment. There is only ONE condition that I do not recommend to buy stocks in your local market: lack of clarity
The Stock market should be highly regulated, highly monitored by Government and officials (even Milton Friedman believes the only role governors should take is regulation and monitoring!) so to be extremely clear to investors and media.

Stocks are long-term investments, so they shouldn't be bought with all you have money. In return, they will bring you great passive income (if bought properly) and great retirement.

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image source

point of entry
when you are willing to buy a company's stock, the point of entry will be important. there are several strategies to do so which I explain couple of them:

  • buying at different levels, so you split the risk of buying at high prices
  • buying at the fundamental advisory of your broker or media press releases
  • buying at the technical analysis, done by your advisor

The beauty of stock markets is: I have never seen a healthy stock index, which didn't have reasonable gains, over long-term periods, which is considered 3-5 years and more. look at the Hong Kong Exchange index over full history to check that fact. So I put them in my No.1 priority of investment alternatives.

ETF and Mutual Funds

Exchange Traded Funds and Mutual Funds. if the terms look sophisticated, just stop and read below few lines, to eternally learn them and never again be terrified by these words!
ETF is a security investment, simply tracking the overall index of a stock market. It means you believe in the stock market, but you don't need to check all the news, charts, analysis etc to consider what to buy and what not to touch!
Mutual Funds
Many investors with small money amounts gathered in a pool, to buy under one management and supervision, is called a Mutual Fund. I can't be more abstract!

ETF and Mutual Funds have the key important characteristics of good investment in their own philosophy: Diversification and Managed by experts.

Real Estates

We are NOT talking about buying the primary residential place. By investing in real estate, I mean buying a property to sell for a profit in a period of time (one week or 10 years etc), or to let and have income.

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image source
Buying lands in proper places which you can imagine a rise through time, can be a great option, also buying foreclosure properties owned by banks can be a good investment also, but there several issues to consider:

  • the current shape and condition of the house, as it might not be in the best shape!
  • the price shouldn't be something that the market missed to buy
    over time of recessions, you can find normal deals, even more valuable than foreclosed properties. so be patient and aware.

Business

Or let's say, Invest in yourself
Wait! I had to put it at the top of the list! YES! Investing in your own abilities and skills is the most profitable investment, plus it will bring you the joy, happiness and fulfillment
I just put it in the end, so my blog post doesn't look like motivation texts you used to read. and it is not, since this is a proven fact, not a motto. All of the wealthy people ranked high in net profit and asset, are people who have successful businesses; let's say entrepreneurs.

But how can you invest in yourself?
I use the below image which explains the best, from [rochemamabolo] blog with the same title and I found it interesting to read

invest-in-self-li.png

Investing in yourself also should be studied with measurable and manageable factors. though it is almost always very low risk, it can be result in high opportunity cost and finally in investment loss.

What is Opportunity Cost

Opportunity cost represents the benefits an individual, investor or business misses out on when choosing one alternative over another. While financial reports do not show opportunity cost, business owners can use it to make educated decisions when they have multiple options before them.

from Investopedia.com

I give you an example to make it clear:
Larry and Bill finish high school at the same time. Larry goes to university to become an expert in computer software, while Bill founds his own company and tries to use whatever he has learnt to code and more importantly, to manage others to do so.

If Larry is Larry Page, definitely he has done a great investment in himself, learning Computer Science in University of Michigan! and if Bill, is Bill Gates, he has done great also in not wasting his time in Harvard University!

But there are many "Larry and Bill"s who don't measure the importance of education or opportunity cost correctly and result in lifetime losses.

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I hope you have enjoyed this post, and if you have found it worth to read, please upvote, resteem and comment below to let me learn from your opinions and advice.
I truly appreciate all your engagements, including your time to read, and I mostly like to have your says here.
Thank you

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