One of the biggest obstacles that holding people back from investing is that they think it is too complicated or risky, but if you know smart investment practices it really makes the whole process a lot simpler.
The truth is that the longer you put off investing, the more you miss out on your best opportunity to grow your wealth.
Why You Need to Start Investing
If you don’t invest and just leave your money in the bank, the interest you get from a savings or money market account probably won’t even keep up with inflation.
You could be losing money, and the longer your money sits in the bank, the less purchasing power it will have.
When you invest, it’s the opposite.
The longer you leave your money in smart investment, the more that your money will grow.
Over time, thanks to compound interest, your money can double, redouble, and keep on growing.
The best time to start learning about investing is right now.
What Are Some Smart Investments?
Once you decide to invest, you have a choice of different alternatives.
You could invest in homes or commercial property. You could invest in gold or in bonds.
The smartest investment is buying shares of stocks, which means you are buying pieces of companies, but let’s take a closer look at all of these options.
Is Gold a Smart Investment?
The price of gold rises and falls, depending on the demand.
Demand tends to go up only when people are feeling afraid or uncertain about the future.
The problem with investing in gold is that you can’t accurately predict what the demand will be at any particular time.
That makes investing in gold more like protection than investing.
Is Property a Smart Investment?
Homes and commercial property can be good investments.
As smart investors you have to look for investments that are selling at only half of their actual value.
That’s hard to find if you are buying real estate, where the selling price is usually close to the value
Becoming a landlord can also be a hassle.
You’ll have ongoing obligations to take care of your buildings and your tenants. And much more.
Are Stocks a Smart Investment?
Plain and simple, stocks ARE a smart investment.
When you buy stocks, you benefit in two ways:
from any increases in the price of shares of the stock, and from any dividend that the company pays to its investors.
The more successful a company is and the more it grows, the more that your investment will grow too.
Smart Stocks to Invest In
As Phil Town the author of Rule one Book says you look for wonderful companies that are priced at a discount.
So, what exactly does that mean?
Here are the four key characteristics that make a stock a smart investment according to Phil Town:
Stocks Whose Business You Understand
Always understand the business of the companies that you buy.
When you have knowledge or experience in an industry, then you can be a good judge of whether a particular company in that industry is truly wonderful or not.
Stocks That Have a Strong Business
Look for companies that will continue to prosper over the long term. Smart stocks to invest in are companies that are well run, have their finances in order, and have something intrinsic to their business that helps protect them from competitors.
Stocks That Have a Strong Management
Before you invest in a company, make sure it is run by people you respect and trust. Do research on the CEO. Look for someone who is on fire, who is driven to excel.
Stocks That Are on Sale
When you buy a company at a price that is less than its actual value, that gives you a margin of safety. If you then practice patience and wait for the stock price to rise to meet the value, you will be richly rewarded.