Investing?

Investing (n-vsting)

The act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit.

Investing means putting your money to work. It’s a different way to think about how to make money. Most of us were taught that you can earn an income by getting a job and working. That’s what most of us do. If you want more money, you have to work more hours or get another job. There is a limit to how many hours a day you can work.

Making your money work for you maximizes your earning potential.There are many different ways you can go about making an investment. This includes putting money into stocks, bonds, mutual funds, or real estate (among many other things), or starting your own business. Sometimes people refer to these options as “investment vehicles,” which is just another way of saying “a way to invest.” Each of these vehicles has positives and negatives, which we’ll discuss in a later section of this tutorial. The point is that it doesn’t matter which method you choose for investing your money, the goal is always to put your money to work so it earns you an additional profit. Even though this is a simple idea, it’s the most important concept for you to understand.

 

What Investing Is Not

Investing is not gambling. Gambling is putting money at risk by betting on an uncertain outcome with the hope that you might win money. Part of the confusion between investing and gambling, however, may come from the way some people use investment vehicles. For example, it could be argued that buying a stock based on a “hot tip” you heard at the water cooler is essentially the same as placing a bet at a casino.

True investing doesn’t happen without some action on your part. A “real” investor does not simply throw his or her money at any random investment; he or she performs thorough analysis and commits capital only when there is a reasonable expectation of profit. Yes, there still is risk, and there are no guarantees, but investing is more than simply hoping Lady Luck is on your side.