Introduction To The Concept Of Investing
Section 18 Module 6
Legendary investor Warren Buffett defines investing as “… the process of laying out money now to receive more money in the future.”
The goal of investing is to put your money to work in one or more types of investment vehicles in the hopes of growing your money over time.
What is investing?
Investing is really about “working smarter and not harder.” Most of us work hard at our jobs, whether for a company or our own business. We often work long hours, which requires sacrifice and adds stress.
Taking some of our hard-earned money and investing for our future needs is a way to make our money work for us.
Investing is also about making priorities for your money. Spending is easy and gives instant gratification—whether the splurge is on a new outfit, a vacation to some exotic spot or dinner in a fancy restaurant.
All of these are wonderful and make life more enjoyable. But investing requires prioritizing our financial futures over our present desires.
Every investment vehicle has its positives and negatives, which we’ll discuss in a later section of this guide. Understanding how different types of investment vehicles work is critical to your success.
- For example, what does a ETF/mutual fund invest in?
- Who is managing the fund?
- What are the fees and expenses?
- Are there any costs or penalties for accessing your money?
These are all questions that should be answered before making an investment. While it is true there are no guarantees of making money, hiring an independent financial advisor can help you make the most of your money.
In the next chapters, we will look at the reasons of investing, and How You Can Make Your Money Work For You.