I am curious how the financial community has changed over the 10 plus years that I have been active in trading and money management. Investing in the stock market is now one of the most discussed topics. This was once the case with the topic of Forex trading (who remembers, understands what I mean).
However, unlike what it was before, now it is no longer easy interest to something that is connected with money, but, without exaggeration, a NECESSITY. More and more people understand that it is necessary to take care of their future on their own. And now I’m not talking about the ability to make money on your own (this also applies to trading), but about the ability to make money bring you new money with minimal human participation.
This may sound crazy, since the pattern formed by most people is based on work, for which a person receives an appropriate reward. But this template is only good, provided that the person has strength and a wish work. If at least one of the conditions is absent, an unpleasant situation arises, for which you need to prepare.
Investing in stocks
Money will only make new money if it is used by someone.… Well, if our goal is to take a minimum of participation in this, then we can start talking about such a direction as Investing.
When I am asked the question “where to invest?”, Without providing options, I am talking about the Stock market.
– But real estate is safer! And it requires less knowledge of any nuances.
– Come on, come on)) Do you really think that it is enough just to buy an apartment, and it will start to bring competitive net profit? It is not uncommon for such profit to even catch up with inflation. The same question applies to both office and warehouse premises. There are hundreds of times more “any nuances” in working with real estate.
There are “all sorts of nuances” even when opening bank deposits, although, in my opinion, the most stupid investment is a deposit in a bank. And you need to study its nuances only in order to make sure that the investment is really stupid.
To be fair, there are also nuances in working with stocks, but they are by no means more than in other investment objects. And if you buy an Asset not just to play around, but to get a solid profit, then it is necessary to analyze it, regardless of whether it is a Stock, an Apartment, a Land Plot, a Deposit, a Commercial Vehicle or any other investment object.
If you think sensibly, then the share of the company (Share) is the most understandable, flexible, cheap, affordable and profitable investment instrument. But there is another important adjective that I have not mentioned …
What about reliability?
By owning a share of a company, you own a share of everything that belongs to that company! Those. the share is secured by the property and profit of the company. A distinctive feature of, say, real estate, is that the property of the company and its profits cannot be “touched”. Owning, for example, an apartment, you can enter it at any time, look out the window, touch the walls, etc. The company, the shares of which you own, is more difficult to touch))
But with the cost, everything is exactly the opposite … You do not see how the price of an apartment is changing, but at any time you can look into the stock price chart and worry about it.
- Apartment – I can touch it, I don’t see how the price changes (which means I sleep well)
- Stocks – I can’t touch, I see how the price changes (if I sleep, it’s somehow bad)
At first glance, well, everything directly suggests that owning an apartment is safer than owning shares. Yes, and at the second glance, and at the third)))) It so happens that you can look directly at things, but not see the obvious. The profitability of the apartment will be lower than inflation, therefore, over time, the apartment will become cheaper relative to the consumer basket, but this will not be seen until you are faced with its sale. And even if it turns out that the sale price is higher than the purchase price, the value of the money raised will be lower than before.
Unlike an apartment, a company’s net income grows in proportion to inflation (all other things being equal), as does the value of its assets. So, at a minimum, it is better to save money from inflation in stocks than in real estate. But of course, there are exceptions related to the terms of the acquisition of the object.
In general, in my experience (and he is more than 10 years old) I can say that Stocks surpass real estate, bank deposits and even government bonds in terms of reliability and profitability. Here many smart guys can argue with me, but I have something to argue with))
Where to begin?
In this article, we have already touched on such a concept as “all sorts of nuances.” Let’s get back to it …
The first thing to understand in the investment world is the investor’s mindset is different from that of an “ordinary” person… Even if you are the founder of a large business, your thinking will be radically different. It is for this reason that the experienced investor finds opportunities where others do not even think to look for them.
Plunging into the world of investments, a person, as a rule, asks himself the questions “Where to invest?”, Then “How to invest?”, And after that “Why invest?”. And the point is not even in the sequence of these questions, but in the fact that among them there is no question “What qualities do you need to develop in yourself?”, As if, by default, every first person is ready for investment activity from birth.
You can consider me an adherent of conspiracy theory, but when any “Mentor” teaches his charges “ready-made investment strategies” and at the same time does not explain how a newly-made investor should think, we end up with an army of bidders who perform not profitable for themselves, but a function that is beneficial to others – it loses money.
I’ll probably complicate things a little now, but it’s important to understand this now …
You need to start with AWARENESS, not learning to think. It is impossible to learn to think like an investor without investing practice, but every decision you make should be accompanied by a pause and questions – “Did I calculate everything correctly? Am I thinking as an investor? Or am I guided by human vices – fear and greed? “
Shape the environment with the right mindset
The process can be simplified by copying the behavior of a practicing investor. There is a great formula for this:
You are the arithmetic mean of your environment
You can read or study video recordings on the topic you need for a very long time, but if every time after that for a long time you return to communicating with people who do not have the way of thinking you need, it will be incredibly difficult to rebuild your brain. This does not mean that you need to give up your environment, it means that you need to acquire connections with people “in the subject” and spend more time communicating with them.
Environment Is what I recommend to start with. The value of a community can hardly be overestimated if it is, of course, properly organized. And our Community is organized correctly 😉))