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Many people talk of themselves as being investors. When I hear someone mentioning that he or she is “investing” some money I always ask them: “Are you investing or trading?” I usually get people confused with this little question. The fact is: Most people don’t know what investing is and they cannot tell the difference between investing and saving on one hand and trading and gambling on the other hand. So let’s look at the four most common types of what you can do with your money if you don’t spend it:

Saving
Saving is about preserving what you have – without the intention of gaining anything. Saving money means you put money away in a safe place, so you can use it later to either invest it, spend it or do whatever you like with it. It does not mean exposing your assets to any type of risk at all. Saving could be in the form of a savings account, cash, gold or whatever does not put your money at risk. An investment fund or a 401K is NOT saving money. Investment funds – like the name suggests is investing.

Investing
Investing has the idea of long term natural growth associated with it. Investing money means giving your money away with a certain amount of risk and the chance for a certain profit. Often the exact amount of the profit is not known in advance. So is the risk that you might lose your money or a part of it. In general an investment is a commitment to convert liquid assets into more illiquid types of assets for a minimum of 2 years or more. Yes, investing is a long-term commitment and something that has made many people unspeakably rich. Investing is not for nervous or paranoid people. It is for the smart and bold. If you are paranoid, you should be saving instead of investing. If you are looking to make quick cash you should be trading.

Trading
Trading is more similar to dealing in any particular goods. There game is buying low and selling high – whether you are dealing in textiles, watches or stocks. The time horizon for a trader is short term. A trade can be from a few minutes to a few months. It doesn’t really matter what the time frame is. What matters is your intention and mind set. If you strive to buy low and sell high, you are a trader – not an investor. Don’t get excited over your trades. If you a seeking pleasure and you find that trading is actually fun and giving you a certain kick, then you are not trading – you are gambling

There are different intentions associated with different types of actions. They could be described as below:

Mindset: Preserving
Action: Saving
Predictability: High
Risk: Low
Potential Reward: Safety

Mindset: Growing
Action: Investing
Predictability: moderate
Risk: moderate
Potential Reward: long-term appreciation

Mindset: Making money
Action: trading
Predictability: low
Risk: high
Potential Reward: high return

Mindset: Excitement
Action: gambling
Predictability: very low
Risk: very high
Potential Reward: loss

When you go from Saving down to gambling with each step predictability is decreasing and risk is increasing.

So when you think about investing your money, think of your goal first – then decide what your strategy should be.

Steve Brzinski writes for several magazines and e-zines. Visit his stock market investment site at http://www.stockmarket-investor.com/.

Article Source: ezinearticles.com

Are you planning to start a new business? Or are you considering expanding your current business and require a bank loan or investment from outsiders?

If you are going to look for an investment of capital it is quite likely that you will be required to have a business plan. If you are starting a business, despite the work involved, a business plan can prepare you for the obstacles ahead and help ensure your success.

A business plan is something that many small businesses fail to create, however, many business owners are adamant that having a written business plan is one of the keys to their present success. Creating a business plan forces you to contemplate possible obstacles to your business and prepares you to find solutions that will help you to overcome them.

To find investors or get a bank loan, they will want to see that you have the experience or resources to run the business. They will want to see your projected income as well as your suggested repayment plan already laid out. Taking the time to do this is not only important for them, but it gives you a measuring tool to verify if your business is growing properly. You can gage your success on how close to the plan your business has actually performed. Perhaps you'll do worse, or perhaps you'll do better, either way it helps you determine how well your business is getting on.

If you have never seen a business plan before you may be concerned that is is too difficult a proposition for you to manage on your own.

While there are services available where you can hire someone to write a business plan for you, depending on your needs it may be wise to familiarize yourself with a business plan's layout. This will not only help you to provide the necessary information, but may encourage you to try your own hand at it.

There's a free tool at www.bdc.ca which will assist you in creating a business plan. Some of the topics you will be required to explain are your Market, Customer, Competition, Marketing Plan, Research & Development along with financial forecasts. You may consider hiring someone to help you with your financial sheets after completing the written part of the Business Plan.

Your Business Plan will become your guide and silent business partner - indicating where you need to improve and helping you stay one step ahead of your competition. Make it a priority to have this crucial road map for your business.


Article author: harman singh

Multiply Your Money – Invest with Care

The investment in stock multiplies quickly. The certificates of deposits may give you interest rates ranging from 4 to 5% depending on the deposit period. Out of the interest that you receive, you have to pay income tax as if it is applicable to you.

The invisible deduction on the interest comes from inflation. The inflation rate of about 3% in USA makes a hole in your pocket without your knowing it. When you consider income tax and inflation together, you may be actually loosing money rather than making money on your certificate of deposit.

Excess Money – Your Saving

The money you every month or year earn is not all spent in the same year. Clever and careful persons always control the expenditure so that they always have an excess of money over the expenditure. This is the rate that drives the future progress of a country

The personal saving rate in USA has been lower at 8% compared to other countries where the rates of 15 to 30% have been the norm over last few years. This excess money is the saving you can invest. Since the savings available in USA is only 8%, the case for investing wisely becomes stronger.

What is the best avenue?

If you can take some calculated risks, the stock markets become the focal point of investing. The increase in the wealth can be phenomenal. An investment of $10,000 made in Microsoft shares in 1986, was worth $3.5 million in 2004. There is no way in which the certificate of deposits can match this kind of increase in personal wealth. But remember not every company has the growth rate of Microsoft.

The General Impression

The general impression about the stock market continues to be bad and the cases of persons going down in stock market become the talk of social circle. No one talks of Warren Buffets of stock markets until they have reached the level of legends. Such legends may be few in number, but there are many Warren Buffets in waiting in wings about which one knows or cares to talk about.

So What Do I Do?

The key is to start investing wisely and go up as you progress. If you follow the tips given below the chances are you might make money sooner than you think.

A warning is due here. Although the tips can be given, there is no guarantee that you will make as you might desire and the rate of your growth cannot be certain. It all depends on how you go about it. None is going to walk you through the phase of investing with a guaranteed return on your investment.

Smart Investing Tips

• Have a plan ready and consult your broker when you make that plan operative.

• Study the market changes and do not be in a hurry to make an investment before you have studied the market movements.

• Although “buy low and sell high” is the stock market mantra, remember that it is not possible to do it always. Whenever you get profit, do not forget to bring it home and re-invest.

• When in doubt, wait and wait. Do move for kill if you find an opportunity. Be ready to take risks if necessary, but the risks should be calculated ones and not reckless.

• Ask when you are not sure. Deal only with the established brokers and develop good relation with the broker. It might pay you in just one deal with that broker.

• Never invest on hot tips, rumors, or inside information. Do not give in to pressure tactics.

• Be on lookout for smart investing opportunity. Once you get it do not let it go.

For more information on shares and investing in stock market, please visit http://stockmarketpages.info

Article Source: ezinearticles.com

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