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 it grows. Simple! Investing is not only just the "stock market" either. You can put your money multiple places 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, energy in the hopes that there is a reward at the end. The stock market just happens to be the most obvious "investment" because there is a whole network of people surrounding it. (read: advisors, companies, brokers, traders, etc.)
However, just because an investment opportunity isn't the stock market doesn't mean it isn't a good one! 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 for an individual to reach this goal. Next we will discuss HOW that happens with compounding.