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 The priority of every Indian family, irrespective of their economic strata has been to save for the marriage of their girl child, next in line is to plan for a permanent shelter which ostensibly also provides security. However with the turn around in the economy investing in real estate has become top priority for all, if not for personal use at least for the excellent return on investments. Money invested in real estate, for income and capital growth, provides stable predictable and long term income return.
However, the most significant advantage of real estate investment is that such investments do not require day to day tracking unlike investment in stocks and shares where rate of interest fluctuates every now and then. This attractiveness of India real estate investment would be further enhanced on account of favorable inflation and low interest rate regime. Within the above framework investment in real estate has become a good option. Return from real estate investment is obtained from rental, lease, and possible capital appreciation.
The most favored investment destination in India are the areas with strong Information Technology (I.T) business. It is estimated that IT professionals would grow at a rate of 20 % per annum. By 2030 India will need up to 10 million new housing units per year. Rapid population growth, rising incomes, decreasing household sizes and a housing shortage of currently 20 million units will call for extensive residential construction, house for sale in India. This is the finding of a study conducted by Deutsche Bank Research.
In Delhi which is come to be known as the BPO (Business Process Outsourcing) capital of the world. The growth of properties in India is happening in the adjoining areas, called as the National Capita Region, and it is prudent to invest in these areas, mainly Gurgaon and Noida for a good return on investment. In Bangalore real estate prices have already shot the roof and it better be ignored as investment in properties. Kolkata, Pune and Hyderabad are the best options and the real estate prices are still at a realistic level.
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