Originally published at: https://blog.12min.com/investing-101-summary/
Do you wonder how people invest and make money, and why you do not do it so successfully?
Well, your wrong investing habits may be the ones that are on your way.
In the summary of “Investing 101,” we cover the bad habits, how you can get rid of them, and why you need to create a portfolio of investments.
Who Should Read “Investing 101”? and Why?Wannabe investors, you have to read this book!
If you are not investing, there must be something that is keeping you away from it. “Investing 101” will give you the proper motivation to start putting your money to work, by explaining how investing works in simple and understandable words.
As you have probably concluded by now, we recommend this to all beginner investors, who are having second thoughts because of the lack of their financial expertise.
About Kathy KristofKathy Kristof is a columnist and book author. Her ﬁnance column is published in more than 50 major newspapers.
"Investing 101 Summary"If you have no problem following clear guidelines, investing will not be troublesome for you.
However, many people cannot follow directions because of their bad habits which stand on their path to becoming wise investors.
So, if you want more money by the time you retire, we propose you start getting over these psychological limitations.
People who abstain from putting resources into the stock are typically afraid of the hazard that comes with it.
However, you have to keep in mind that these feelings of dread are there because of misunderstanding. Moreover, if you decide to put some time into understanding market risk, we promise you that you will soon be able to improve your investment portfolio.
Simply put, in the financial world, the risk equals uncertainty. In other words, the risk is not connected to the likelihood of loss, but to the variance in the returns.
However, that is not all there is to it.
So, although stocks are considered risky investments, the odds are that in the long-haul their value will increase. Yes, low-risk investments will protect your principal, but the profit you will get out of them is not much.
Of course, there are ways you can earn money while staying safe. At this point, the need to create a diversified portfolio comes into play.
The diversification of portfolios will dramatically decrease risk. However, merely having a bunch of investments is not what “diversified portfolio” means.
Instead, try to make many different types of investments. The trick is to diversify just enough, so you can minimize the risk and stress, but not to the point where you will sacrifice your profits for the long haul.
For more detailed explaining of the information we have given you, read “Investing 101”. Next, scroll down to the key lessons we have taken out from this book.
Key Lessons from “Investing 101”1. Investment Categories 2. Bad Investing Habits of Women 3. Bad Investing Habits of Men
Investment CategoriesThere are ﬁve basic categories of investments, that show what the investment does, not what it is.
- Investments that safeguard your principal
- Investments that provide income
- Investments that promise strong growth of your principal
- Investments that protect you from inﬂation
- Investments that allow you to speculate
Bad Investing Habits of Women
- The Poor Girl
- The Substitution Shopper
- The Martyr
- The Princess
Bad Investing Habits of Men
- The Unrealistic Pessimist
- The Ostrich
- The Tinkerer
- The Believer
- The Money-Lover
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“Investing 101” Quotes[bctt tweet="If you plan to invest for only a few years, stocks boil down to a gamble. This is not a wise place to invest your rent money." username="get12min"]
[bctt tweet=“Diversifying dramatically reduces your risk.” username=“get12min”]
[bctt tweet=“You want to be careful not to put more money in safe, low-yielding investments than absolutely necessary.” username=“get12min”]
[bctt tweet=“When you invest in stocks, you risk losing your initial investment, but because you are taking a bigger risk, you get the opportunity to earn far bigger rewards.” username=“get12min”]
[bctt tweet=“Stocks are also ideal to have in your retirement portfolio. The younger and farther away from retirement you are, the more stocks you can handle.” username=“get12min”]