How to invest you money? essay

This paper analyzes and discusses how to invest one’s money. This paper maintains that to invest money require knowledge of the rules if one wants to become successful. This therefore discusses the investing money in the context of the purpose of the investor. 2. Analysis and Discussion 2. 1 Starting with the objectives This question starts with the question with the word “how”, therefore one should know what to do and to know that one has done right, one must have a basis of saying so. Langemeier has a very good suggestion in answering the question. She said, “We start with your objectives.

” Langemeier continued saying: “Every investor’s objectives will be different, and it depends on your specific needs and desires. Maybe you’d like to retire, but don’t want your income to drop. You therefore need a good passive revenue stream. Or, maybe you want to build a solid equity base that grows by more than the typical 5-7% per year (or maximum 12%) that most people see. … This equity base (your net worth) gives you much more leverage to live how you want later in your life. ” What the author is saying is that one could start with the equity base.

As to how is this done is just knowing what one got in terms of equity and know how many percent increase will one set to attain. It is similar to having an aim or a target. Does one want a 20% or 10% return on equity? What will be going to happen then after the objectives are set? Langemeier said, “Once you’ve decided on your objectives, you will need to consider your investment opportunities. When you do, you will want to be sure that they will fit in with: 1. Your visions – the investments you choose should bring back enough return so that you can reach your financial goals.

2. Your values – your chosen investments should never compromise your integrity in any way. When you know the parameters you are dealing with, it will help you sift through the myriad of investment opportunities that will inevitably come your way. ” An observant person would notice in the above that there are two considerations in considering one’s investment opportunities. The opportunities actually characterize the objectives, where on is quantitative and other one is qualitative. Quantitative is in terms of figures or rates that one wants or desires to attain.

The other one is in terms of values. As to what are values are relative to each person. The best example is that one would limit oneself to go into one kind on business like lending at usurious business. The investor may not want to invest in business that he may not fully support like casino operation or lottery. There are examples of things he believes that although said kind of business might promise him a good return, he will not be in conscience happy with what he will do because the business will not accomplish the thing he values. 2. 2. What to do next?

Langemeier said: “Next, decide whether you want to be an active or passive investor (or both). Neither is better than the other, but one might appeal to you more. Active investing is when you have a direct involvement in the investment. Passive investing is when you up the money and rely on other people to manage the investment. If you think you can only do this if you’ve got several hundred thousand to spare, think again. My clients invest with far less. ” The author offers again a choice of how to do it? Some may want to become an active investor but simply may want to be passive or both.

This is also in accordance with the visions or values of the investor. This will show also how the investor handles his trust with people. Direct involvement may take the form of actually running a business of say a bank. He may for example become the president of a bank. By becomes such an officer, he executes and implements bank policies which may have to be approved by the board of directors of the bank. He goes every working to the office, attends meetings, actually directs people and lead the organization to where it can possibly accomplish.

Being a passive investor may simply take the form of investing in stock. By so investing with being part of the day to day business of the corporation ones has invested into, one is allowing other persons or the corporate management of an entity to attain what the investor desires in the form of higher returns. An example of this type of investment will be further discussed in the following sections. An introduction of portfolio investment and investing on stocks will be explained more in subsequent part of this paper There are advantages and disadvantages of doing the same.

Langemeier explained, “How you invest dramatically affects how you manage and spend your time. Active investing obviously requires more work on your part, but these kinds of investments tend to have much bigger returns. As a wealth coach who specializes in making people millionaires, I usually recommend that my clients have both types of investments. ” 2. 3 Differentiating between bad or good investments Langemeier said: “Finding investment opportunities is not a problem. Once you start looking, they will pop out of the woodwork.

As a novice investor, you may not be able to differentiate between good and bad investment ideas. That’s why it’s important to have what I call a Wealth Team, which includes a mentor, colleagues, and very good legal and accounting advice. ” A precaution was made by the Langemeier , saying: “However, you don’t make your decisions based only on what these professionals tell you. You need to educate yourself as much as possible about the various kinds of investment opportunities available to you: their relative risk, their expected return, the potential downside, and the credibility of the other players in the investment deal. ”