What is Investing? (Part 1)
"What actually IS investing? What does it mean?"
I have heard this from almost all of my clients. Or at least, the ones who are brave enough to ask. If you don't really understand what investing is, you are not alone.
Investing is putting your money somewhere with the expectation that it grows. Simple! Investing is not just the "stock market" either. There are other types of investment vehicles where you can put your money and expect to receive more money in return. Curious what other types of investments you could have? Here's a few:
Real Estate (flipping, buy & hold, rental)
Precious objects (art, precious metals)
Business (your own!, stock ownership, corporate debt)
Venture Capital (high risk, high reward)
Investing also applies to concepts other than money. You put forth effort, time, and energy in the hopes that there is a reward at the end like working out or honing a skill. The reason you may equate investing to the stock market is because there is a whole network of people that surround it whose main job is to get you to invest such as advisors, companies, brokers, and traders. The other types of investments don’t have such a robust network dedicated to reaching you. However, that doesn’t mean they are not good investment opportunities!
There are so many ways to make money. The average millionaire in America has 7 different income streams. These come from one or more of the investment list above. If you are a little iffy about investing in the stock market, try out another investment opportunity you are more comfortable with.
To reach financial freedom you need your money to grow. Having some type of investment, regardless of what it is, is necessary to reach financial independence. Next we will discuss how your money grows in the next installment of our investment series with compounding.