Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas – Paul Samuelson
Investing is putting money into productive use; it helps you grow your money; it requires a lot of planning and patience. Before you invest in anything, do your research, do not speculate the market, follow market trends and history.
Your choice of investment depends largely on your risk appetite i.e. the level of risk you’re willing to take, how long you plan to invest, your expected returns and your financial goals. Financial goals are objectives you set to achieve financially in the short or long term. If your goal is to buy your first house in ten (10) years, you need to invest the money in an investment vehicle that will help you reach your goal faster.
If you are Risk Averse – i.e. an individual who does not like to take risks, you should invest in short-term investments such as treasury bills popularly known as T-bills, money market funds, fixed deposit accounts, certificates of deposits etc. which have relatively low interest rates and low risks, making them very safe. They are also highly liquid – this means they can easily be converted to cash.
Robert Arnott says ‘in investing, what is comfortable is rarely profitable’, so, for Risk Lovers or Risk Seekers who do not care about comfort and are willing to invest for long, despite the high risk involved opt for Long Term Investments such as shares, bonds, real estate etc. these kinds of investments mostly do not have maturity dates and their returns are usually higher.
Do not invest in something you haven’t researched on. Do your homework well, before you make any commitment. Get help from a professional if need be.
Rule No. 1: Don’t lose money. Rule No. 2: Don’t forget Rule No. 1 – Warren Buffett