Wednesday, January 11, 2012

Invest do not speculate

As I mentioned in a previous article that most people speculate. Although most like to call themselves "Investors", they are simply not! To be a true investor, the first step to take before you put your money into anything is understand the nature of the business, company, or venture.More specifically you have to understand the economics of the business such as: expenses, development, pricing, competition, and future prospects. The second step is to look at the numbers. For example if you are looking to buy stocks of a publicly traded company,  look at its balance sheet, and income statement...etc. Study trends of earnings, expenses, and assets.

The key idea here is that you have to pretend to be the owner, manager of the venture you are going to put you money into, therefor you have to be able to explain everything about the business if asked questions about it. Unless these steps are taken you are simply gambling your money away.

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