What is Investing?
Investing is projection of the future. It involves making assumptions
about the future. This unavoidby is about taking long term decisions,
how to make and how to invest and what assets to invests in.
Investing is taking some of your money and trying to make it grow
by buying things you think will increase in value over time.
When wondering whether you should save or invest, the main
consideration is your goals and your financial situation. Planning
your finances for short term savings and long term investment is
your assessment of what you project for the future.
Medium term goals are things you plan within the next 5-10 years.
Longer term goals are ones where you will not need the money
over ten years or more.
Comparing investing styles
1. Active vs Passive investing. The goal of active investing is to
"beat the index" by actively managing the investment portfolio.
Passive investing advocates a laid back,passive approach,
noting that it is difficult to beat the market consistently.
2. Growth v value. Growth investors prefer to invest in high
growth companies which have higher valuation ratios,
such as Price-Earning (P/E) ratio than Value Companies.
Value Companies have significantly lower P/E but pay
higher dividends,
Investing and Speculation
There are three factors to consider.
1. The amount of risk taken
2. The holding period of the investment
3. Source of returns.
In summary, Investment is the expectation of a return in the
form of income or price appreciation in the core premise of
investing.
Victor Cherubim
posted by Survival Instinct @ 12:46
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