Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Beta (finance) wikipedia , lookup
Negative gearing wikipedia , lookup
Systemic risk wikipedia , lookup
Land banking wikipedia , lookup
Financial economics wikipedia , lookup
Investor-state dispute settlement wikipedia , lookup
Syndicated loan wikipedia , lookup
Investment management wikipedia , lookup
Stock selection criterion wikipedia , lookup
To invest is to allocate money (or sometimes another resource, such as time) in the expectation of some benefit in the future. Investing means putting your money to work for you in future. In finance, the expected future benefit from investment is a return. The return may consist of capital gain and/or investment income, including dividends, interest, rental income etc. Investing means committing your money to a financial asset (stock, bond, mutual fund) or endeavor (business, rental property) with the anticipation that it will pay you back with a sum of money greater than what you could have earned with the next-best alternative. If you want more money, you have to work more hours. BASIS FOR COMPARISON INVESTMENT SPECULATION Meaning The purchase of an asset with the hope of getting returns is called investment. Speculation is an act of conducting a risky financial transaction, in the hope of substantial profit. Basis for decision Fundamental factors, i.e. performance of the company. Hearsay, wild rumours, technical charts and market psychology. Time horizon Longer term( 2 year or more) Short term(Less than 3 month) Risk involved Moderate risk High risk Intent to profit Changes in value Changes in prices Expected rate of return Modest rate of return High rate of return Funds An investor uses his own funds. A speculator uses borrowed funds. Income Stable Uncertain and Erratic Behavior of participants Conservative and Cautious Daring and Careless Want to increase their personal freedom sense of security ability to afford the things they want in life Investing is not gambling. Gambling is putting money at risk by betting on an uncertain outcome with the hope that you might win money A "real" investor does not simply throw his or her money at any random investment; He or she performs thorough analysis and commits capital only when there is a reasonable expectation of profit. There still is risk, and there are no guarantees, but investing is more than simply hoping Lady Luck is on your side. 1. Highly successful investors are proactive learners "To learn new things; you might need to unlearn old thought and tricks. Both processes can never be achieved without humility." -- Ajaero Tony Martins "The rich invest in time, the poor invest in money." – Warren Buffett 2. They always invest with a planned exit strategy "Always start at the end before you begin. Professional investors always have an exit strategy before they invest. Knowing your exit strategy is an important investment fundamental." -- Rich Dad 3. They are patient "I never attempt to make money on the stock market. I buy on assumption they could close the market the next day and not re-open it for five years." -- Warren Buffett 4. Highly successful investors have strong emotional control To be a successful business owner and investor, you have to be emotionally neutral to winning and losing. Winning and losing are just part of the game." -Rich Dad 5. They have a well defined investing strategy Buy when everyone else is selling and hold when everyone else is buying. This is not merely a catchy slogan. It is the very essence of successful investments." -- J. Paul Getty "Diversification is a protection against ignorance. It makes very little sense to those who know what they are doing." -- Warren Buffet 6. They are focused The men who have succeeded are men who have chosen one line and stuck to it." -- Andrew Carnegie Warren Buffett is focused on stocks, Tim Ferris on angel investing, Jim Rogers on commodities future and Donald Trump on real estate. 7.Successful investors use trend to their advantage "Your greatest and most powerful business survival strategy is going to be the speed at which you handle the speed of change. That speed of change is trend." Ajaero Tony Martins know how to use trend to their advantage. Average investors panic over market fluctuations but professional investors welcome these fluctuations because it's based on these fluctuations that they make their money. Look at market fluctuations as your friend rather than your enemy. Profit " folly rather than participate in it." Warren Buffett from 8. They are persistent "When everything seems to be going against you, remember that the airplane takes off against the wind, not with it." Henry Ford Sticking to your investing strategy whether you are winning or losing requires a great deal of persistence. Average investors lack persistence and that's why they will forever remain average. They jump from one strategy to another and are always looking for the next hot tip. 9. They thrive on risk "Risk comes from not knowing what you are doing." Warren Buffett Investing is a risk but not knowing what you are doing is a greater risk. Every professional investor, whether on the winning or losing side still respect the 50 -50 probability of success or failure. A major difference between a professional investor and an average investor is that a professional investor will always invest with a strong risk management system in place. 10. Successful investors are disciplined "My two rules of investing: Rule one never lose money. Rule two never forget rule one." Warren Buffett Successful investors are strict with themselves when it comes to investing. Aside their investing rules and principles, they are still guided by a strong self imposed standard. Professional investors know that it takes a great deal of discipline to stick to your investing strategies. 11. They know how to use leverage to their advantage What's the major difference between a successful investor such as Warren Buffett and the average investor? successful investor knows how to make money by investing with other people's money while an average investor invests with personal funds. Investing with other people's money is a form of leverage. 12. They learn quickly from their mistakes "Even a mistake may turn out to be the one thing necessary to a worth while achievement." Henry Ford When investors talk of experience, they are simply talking about the trials faced, mistakes made, lessons learned and triumphs achieved. You can never become successful investors without making some miscalculations or mistakes. "Only those who are asleep make no mistakes." Ingvar Kamprad 13. They have a team of professional advisors "It is better to hang out with people better than you. Pick out associates whose behaviour is better than yours and you will drift in that direction." Warren Buffett If you observe successful investors closely, you will notice they have a team of professional advisors. Average investors try to beat the market alone while professional investors invest as part of a team. Birds of the same feathers flock together. 14.They have a strong financial background Successful investors have a solid financial foundation; a foundation melded on the streets. On the streets, you learn from your own experience. Successful investors build up their financial base by attending seminars, reading books and journals, learning from a mentor and listening to tapes; after which they go out on their own to gain street