Week 9 – Investments

Investments are one of my favorite topics. It’s where my opportunity junkie gets to shine.

The official definition of investment is the action or process of investing money for profit or material result. That’s a little different from my definition.

An investment is investing money in something that should grow larger if another resource is applied consistently. That other resource may be time or effort, or sometimes, more money.

There is always a risk in investing, so let’s make sure we’ve taken care of our bills, our emergency funds, and our retirement savings before we begin down this path. Like gambling, if you can’t afford to lose it, you shouldn’t play the game.

Investments are opportunities.

Let’s start with the stock market. There are thousands of companies you can invest in, either directly or indirectly. If the company is growing, the price of its stock will likely increase. The problem lies in that we only know what is reported regularly. Unless you are working for the company you invest in, you never really know the inner workings and whether they are growing or shrinking. Fortunately, they are all required to file quarterly reports (10-Q) with the SEC. The key is reading them. When it comes to stocks, I believe in long-term investments. I buy and hold.

There are other ways to buy stocks; lots of people play with day-trading. I like to temper my risks. If you want to play in this arena, do your homework. Hell, do your homework no matter what you are investing in.

With stocks, the place to begin is with an investment firm – you can go it alone or through a Certified Financial Advisor. If you want to DIY this, set up an account with a major brokerage firm, e.g., Charles Schwab, Fidelity, Edward Jones, Robinhood. Then use all of their resources to learn and choose your stocks, bonds, EFTs, or Mutual Funds. Buy small and watch it grow. Again, never invest what you can’t afford to lose.

Don’t try to time the market, just make regular investments. When the market starts to drop, as it did in March 2020 – just hold on. It may appear you are losing money, but it is only a paper loss until you sell the stock and solidify it. If you can wait, you should and let it recover on its own. Back when I advised a 401(k) Plan, that was the number one advice I offered to employees. Don’t panic; it will recover.

The stock market needs time as the resource to do you any good.

Business opportunities are investments too. Often you’ll need time, money, and effort for these to materialize. Buying a business you don’t have the resources for is a sure way to failure. Sometimes it is a small investment, so it may be worth the gamble. Except for our core business, all of our others have been purchased for small monetary amounts, to begin with. Then we have invested time, money, and various amounts of effort to grow them. I love business, so this is my favorite. Finding the unique value proposition of a business and building on that.

There are lots of other opportunities for investments too.

You can invest in other peoples’ business outside of the stock market. Be sure you understand the business and your role in it if you do that. I recommend WeFunder for finding startups that can use some help. They will spell out exactly how you can expect to receive your return on investment.

I will address Real Estate as an investment in a future week but just know, I’m a big fan.

To give you an idea of how diversified your investments can be – here’s a list of things I’ve invested in throughout my lifetime (not all have been monetarily successful – but all were a learning experience.)

Businesses – as a limited partner, as a general partner, as a sole practitioner, as an LLC
Natural Resources – in a grove of trees, in oil and gas stocks
Stock Market – buying individual stocks, buying mutual funds, buying growth stocks, buying EFT’s, buying REITs
Real Estate – Residential real estate for flipping and rentals

Key takeaways:

  • Do your research.
  • Trust your instincts.
  • Do not expect a quick or easy return.
  • Everything takes more time than you expect it to.
  • Don’t gamble more than you can afford.
  • Slow and steady wins the race.

*If I used terminology that you aren’t familiar with, or you need a helping hand in understanding an investment please email me, I will be happy to help you determine pros and cons.

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