Angelie emailed me that she wants to learn about investing. She is still a college student who will graduate next year. She wants her money to be profitable and not stagnant. I thought about writing a series of 'basic' investing from which Angelie can learn. So below is my first article about it. Mind you that the articles posted are not all inclusive of the theories and concepts of investing but rather just a mere reflection of my opinions about investing as a whole.
What is Investing?
According
to Investopedia, investing is the act of committing money or capital to an
endeavor with the expectation of obtaining an additional income or profit.
In investing, we expect
a profit or income to the money we invested. If you invest 10% of your salary and
then you expect a profit. The goal of investing has always been to earn a
profit and protect the value of your money so that it will grow exponentially.
Your employment doesn't count as an investment because as an employee you are putting your time,
skills, expertise and knowledge in return for your salary. You are “investing”
your time in employment whereas in the real sense of investing, you are putting
your money in order to earn a profit.
If you put a small part
of your salary into the different investment vehicles, then that can be
considered investing.
Investment Vehicles
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So what are the
different types of investment vehicles? These vehicles are the ways and means to
invest. When you are planning your vacation to Boracay, you choose which
vehicle you are going to use in order to get there. Do you want to use an
airplane, a car, a bus, or your personal jet? You choose which one you think
will serve you most. Most people will choose an airplane because they will be transported
to Boracay faster and with less hassle. In short, it is the most convenient way
to travel.
Others will choose
their own car because they know their automobile very well. Perhaps it is Japanese
made and they count on its reliability. Instead of riding a bus where they need
to mingle with other passengers whom they totally don’t know, they choose to
bring their own car. Maybe upon unloading their car from the (RORO) ship, they
might find interesting places to stop for a while and take some rest or snap a
couple of striking pictures.
Others choose a bus
with the main goal of having the cheapest way to go to Boracay. Mingling with
other people, waiting for the bus and port terminal, smelling the odors of
other people, hearing the snore of your seatmate are all fine with others.
These annoyances are already expected if you choose to ride a bus going to
Boracay.
In the same way, when
you want your money to “travel” to “Boracay”, you can choose among the
different investment vehicles available in the market. You can choose stock
market, bonds, real estate, mutual funds, forex, gold, options, futures, etc as your vehicle.
Among these investment vehicles, you can choose which one will take you to “Boracay”,
a peaceful and relaxing place. You can choose all of the investment vehicles
enumerated above if you have the money and resources to do so but for the sake
of your sanity, we will focus on one investment vehicle only which is the main
topic of this blog, the stock market investment.
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