FINANCE MANAGEMENT 5- On Investing

Many are lost as to what to use their money for after saving-up and crashing-out debts. They get lost in this 'trans-atlantic disputation' as their money and skill-sets aren't ripe enough to help them start a business. A suggested alternative is investment in stocks. To build wealth you don't always need to be the boss of a company or corporation but a boss of your finances. The stock market is an awesome medium for wealth building. One of the reasons for the compelling nature of stocks is its impressive history. For decades, stocks have consistently out-performed all other investments when looking at total return.

"Stocks are one of the primary tools a company uses to raise capital to fund growth and expansion. A share of stock represents ownership in the company, along with the right to share in the future financial performance of that organization, whether it is good or bad. The company's annual and future earnings forecast determines how much a 'share' of its stocks is worth. If earnings are up and the forecast is good, the value of each share rises. If earnings are down and the forecast is not good, the value of each share declines. This is the cycle. Stocks do two things for you. First, they are the foundation for capital growth. Second, they help you set-up a hedge against inflation. Generally, they are a safe parking place for your money" - Wealth Strategies by Todd Duncan.

Whether you take a buy and hold approach or actively play the market, stocks will go up and stocks will go down. Serious investors make a commitment to understand what they buy, reflect on how this meets their goals, review their overall plans yearly, and adjust holding where necessary, using their asset-allocation model (read previous post for understanding of this term). Stocks go up and down. Knowing how they work is an important ingredient for your accumulation of wealth. The King of investment himself, Warren Buffet can teach you more on how this principles stated above works.

P.S: Read Wealth Strategies: 9 1/2 steps to achieving physical, financial and spiritual abundance  by Todd Duncan for more insights.

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