Investing Basics
Matthew Collins
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Copyright 2020 by Matthew Collins
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Table of Contents
Introduction
Ar u a trdr or an investor? Hv you vr whd u wr n nvtmnt whiz kd lk Warren Bufftt, Ptr Lnh or George Soros? Would you gv vrthng jut t become uful th mn? What l hrtrt d hghl uful nvtr possess tht u dn't? If someone offered to xln to you n detail th b hrtrt d b vr successful investor, wuld you ltn and lrn whl hrtdl? If ur answer t any of th utns bv is , thn th bk fr u.
To be financially wealthy, you have to first be wealthy in knowledge. The legendary investor Warren Buffet spends 80% of his day reading. Why? Because when you increase your knowledge, you increase your capability to deal with uncertainty and your decisions will be made based on facts and solid information. As a result, your investments will bring higher returns and you will see your wealth skyrocket.
The fact that you are reading this book tells me that you are hungry for growth and knowledge that will help you achieve your goals in life.
First, I will share with you some reasons why you need to become an investor and what are some of the mental barriers that most people put themselves to not start investing. Then we will discover how successful investors think so you can start thinking and acting like them and obtain excellent results. After we uncover the successful investors mentality, we will find out the key characteristics they all have in common. This first part will be like getting into the mind and soul of an investor to truly understand what makes them successful. Once this is very clear, well go over how to make a plan that will ensure you to be secure, comfortable, and rich. This will bring stability to you and your family so you can achieve your goals and dreams. Finally, well go over some of the different types of investments there are available that will help you increase your wealth and get out of the rat race.
Chapter 1 Why Becoming an Investor?
One mll t tht vrn can take t mrv their fnn t trt investing. Th goal f nvtng to nr your wlth and umult mn for long-term gl and have the freedom that we all strive for.
An mrtnt nvtmnt rrut n nvtr mindset. Th mn being hlgll rd t accept th unrtnt tht part nd parcel f investing. Below you will find some reasons why someone becomes an investor.
Attrtv rturn - According to data mld b Ibbotson, an investment rrh firm, btwn 1926 and 2013 (88 years), th mund nnul rturn on vru t f nvtmnt was follows: 12.3% for mll company stocks, 10.1% fr lrg company tk, 6.0% for government bonds, and 3.5% fr trur bills. The nfltn rt durng this rd vrgd 3.0%. Pl wth ll of thr mn n h assets brl would have kt u with inflation nd probably hd a ngtv rturn after ubtrtng both nfltn and tx.
Th magic of compound interest - Over tm, mund ntrt magnifies th dffrn in the rturn of asset l. The compound interest involved is usually high. It comes up like magic.
Long-term grwth - Money grw faster vr time n nvtmnt rather thn vng rdut such bank unt nd CD.
Tm dvrftn - Tm decreases th ups and downs f nvtmnt. Th is especially tru fr tk nd mutul funds tht invest in tk. Investors should knw th time frame fr their fnnl goals and plan on nvtng at least five r t rdu th risk of l td with nvtng in stock fr a hrt tm period. Anthr way to dvrf to lt dvrfd mutul funds r exchange-traded funds.
Tax-free investment options - Svrl investments rvd tx-fr nm, whh beneficial fr hgh mrgnl tx bracket investors.
Affordability - Mn nvtmnt require nl mll munt t get trtd. Exml nlud tk tht offer drt purchase plans nd mutul fund tht open unt fr lttl munt f mn. You n rdu th vrg t of n nvtmnt vr tm b dtng a fxd amount t rgulr time intervals.
Why people do not invest?
Th mmn mntn I hr l say tht thr t f lvng will substantially rdu ftr rtrmnt. Th believe superannuation, n matter how small, wll b sufficient t fund thr rtrmnt. People ftn blv tht when they r n thr 60, they wll have thr hu nd r d ff. Th wll not b wrkng and therefore trnrttn t wll b down nd hfull their hldrn will hv mvd ut f hm.
For nn under th g of 50, I mlr u t g nd k t someone aged vr 60 nd ask thm how tru the bv ttmnt are. Lets break t down nd nlz th truth f post-retirement costs of living. Frtl, lets talk but the hu u have d ff. Anyone wh h dlt wth rtrmnt vllg wuld knw tht th house th first to go.
Prr t moving nt a rtrmnt village, mn seniors r forced t ll their hu nd use the mn t pay fr a bond. Furthr, th r thn xtd to n ongoing mnthl fee wll.
What but the r? Wll f you rtr t 60 nd lv t be 80 thn I guess you wll b buying a new r t least once n th following 20 years unl u r happy drvng n ld bomb, tht m brk down t any nd.
Fnll, th children; whilst th huld hv moved ut t this tg, I dr say that grndhldrn and mb vn great-grandchildren wll be mng to vt nd th wll cost u mn.
Now lets mk a uk lt f xtr xn ld g brng tht u may nt hv ndrd. Higher hlth nurn premiums, hm mntnn, mblt d, trvl, inheritance for th kids, funeral expenses and nursing care. A u n , cost of lvng in retirement n actually nr n drt contrast to what mn people believe.
Lk f rnng
A wth all people th blv that they d nt get paid nugh t invest. Th uldnt be any further frm the truth. Th amount f money u huld t aside for investing is a rntg f your and thrfr n b spared n mttr what ur salary.
