Investment Losses

calmarnet asked:


I always hear people saying that diversifying your investments. I would like to know what exactly it means. I checked many places like wikipedia or the capital asset pricing model. None of them states clearly what exactly diversifying means in real practice.

PETE

Namsing Then asked:


It is hard to imagine if anyone is living without money and it is equally hard to imagine if humans are living without investing in someway or the other. In plain language, investment means the act of investing or laying out money or capital in an enterprise with the expectation of profit. But at the same time the term investment also means money that is invested with an expectation of profit.

Investment is closely related with earning money and employing it to earn more by its virtue of its inherent multiplication factor. It is this character of money (read investment) which drives people invest in various asset types in which they are comfortable with. As a general rule, it is not quite natural for the novice investors to pursue high return investment categories as they perceive the high element of associated risk is beyond their control.

The Big Question: Could You Do Without Investment?

The answer is rather simple as everyone from top down has wanted to invest in one asset or the other. The more conventional the asset type is more the investors and thus investment. Let me detail this out for you.

Traditional investments like investment on gold and land have never let down the investors although rate at which they appreciated was below par till recently. But come to think of it; the simplicity of prediction matrix and non volatile nature of their class made them the darlings of one and all.

Current Investment Scenario

The current investment arena is extremely wide and intricately interdependent. The simplest investment by far, the savings account, contributes to the pool which bank draws from, for advancing loans to a variety investors. Thus the return on your investment (savings) is connected to the return the bank expects. Floating rate of interest is one of the manifestations of this interdependence.

Investment Options for You

It is impractical to attempt to list out all investment types. However the following are the representative types which apply to all economies.

1.Investment on stocks and securities

2.Investment in money market instruments

3.Investment in mutual funds

4.Investment in ventures

5.Investment in insurance

Speculative Investment

It is difficult to foretell how and why people make investment decisions. Also it is not true that investors play safe every time. Speculating a higher than usual and short term profit is none too unusual tendency with some. Such an investment type is classified as speculative investment. Although it beats logic, it goes by gut feeling of investors. Many stock investment and real estate speculators have made big time money taking tremendous risk.



AUGUSTINE

Eze ThankGod ik asked:


There are four basics characters in man to watch out for. These are the characters that can influence a man’s investment plans either positively or negatively. Before investing, you have to be in charge of your mind. Don’t invest out of impulse. This has led many people into making poor investment decisions, and the consequences are always catastrophic. This leads us to what we can call the idol of the mind. There are some people today who still believe that investing in stocks is a form of gambling and therefore, since they are not gamblers and are not ready to gamble, it is better for them to stay off stocks. They believe that since there is nothing like professional gambling, there could never be a professional investor in stocks. Instead of seeing investments in stocks as a security for their future, especially when the company you choose to invest in is solid, these set of people decide to keep their money in banks.

One thing we must know is that life itself is a risk. This life is just a battlefield, and no one goes to the battle field without scars. So you can’t play the stock market without losses in some trades, nobody will promise you that, but the aim is to minimize your losses and maximize your profits. And that is why you really need to acquire knowledge about investing. There is no neutrality in life, it’s either you are a success or a failure and what determines your success in life is your investments. If you don’t conquer poverty, it will conquer you. So decide to start investing today in order to secure your tomorrow. Have a concrete investment goal, adhere to it and you will see success coming your way. If you invest in nothing, you will reap nothing, but if you invest in something valuable, you will definitely have a valuable profit in return. Your failure or success tomorrow starts today. The error of judgments of yesterday is what is manifesting as poverty and failure in the lives of many today. If you fail to get a quality education today due to the fact that there are lots of graduates roaming about without jobs, and for that reason, you decide not to go to school at all, be sure that poverty is waiting for you tomorrow. If you loose some money in stocks today, and therefore decide to turn away completely from stock or other forms of investments, know that you are doing yourself a dis-service. The truth is that without any concrete investment goal, there can never be success. After all, it is when you sow a good seed that you can expect to have a bountiful harvest, but if you fail to sow, you can’t expect to harvest anything. There are many other factors that militate against sound investments, though we are focusing our discussions here on stocks investments. Note that there are many other types of investments, so investments are not only stocks, but we are mainly talking about stocks here because it is the basis of our discussions here. Generally, investments are places you stake risks in order to profit tomorrow, the higher the risk, the higher the profit potentials. This is going to be our topic of discussion on another day.

Invest wise.



ROCKY