If you want to make money investing, learn how to tell the difference between good investments and bad investments. You have to increase your financial intelligence and avoid risk. Investing is not risky itself, but being uneducated is. If you don’t know what you’re doing and you randomly throw money at the stock market or real estate, you are essentially gambling. Buying stocks low and selling high without analyzing the market and just praying are horrible ways to make money. If you’re going to do that, you may as well pay a lottery ticket. At least that way, you have a bigger payout when you win.
Do you know what investment is? What makes an investment good? First, you have to clearly define investment. It means different things for different people. Investing is when you use a resource in the attempt to get a return over time. You use your time or money right now in order to get more later, is the basic story. In order to tell the difference, research as much as you can into the art of investing. Keep your emotions under control, because logic will help you make money whereas using fear and panic will not.
Do not simply follow the actions of other investors, because oftentimes by the time you hear of a good investment or a hot tip, the good deal is already gone. Once everyone starts to make money doing something, it no longer becomes useful. Like leading the lambs to the slaughter, your money will simply disappear if you follow like a sheep to other’s investment advice. Only you can tell the market trends and find out for yourself what you need to find.
Some examples of questions to ask yourself are “How much experience do the runners of the company have? How long has the company been in business? Can their product provide a service to people? What is the company’s mission plan? Does the company care more about their shareholders or about pleasing the customers?” These are only a few examples but the more you can find out about a company, the more likely it is to stand the test of time. If the company focuses only on money or is run by incompetant and inexperienced people, don’t invest in the company. It will be a dud. It may be worth lots of money now but the prices will fall very shortly once the company catches up. If you focus too hard on the dollars, you may not be able to see what your brain and logic is telling you. Don’t be a gambler, be an intelligence investor. Increase your financial intelligence, learn to invest, and it will pay off for you in spades.
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