Investing is very exciting. This is often something we want to be doing.
Investing carries a feeling of boldness and forward thinking. This is money with a sense of danger. This money takes risks. Because it takes risks there is the possibility of our money returning to us multiplied. We send investing money to work for us. We have fewer obligations to it than it has to us. We can easily feel a sense of pride towards our invested money. This is money that is out there working. We may even carry a feeling of respect for it.
This money also has a feature that saving money does not. This money can disappear completely. That is a big risk. However, with big risk can come big rewards.
Think of the virtues of money invested. Here are a few:
The balance can grow at a much faster rate
It offers the greater possibility for security in the future if the investment works out well
It has many forms it can take in the form of the stock market, businesses, tangible items like gold, etc.
Some investments can give you cash flow (rental income from real estate, dividends from stock, passive business income etc.)
The benefits of money invested frequently take shape as a possibility. A possibility that you are willing to reach for with the desire to achieve, but also possibility you are willing to lose in the process.
We do this because of potential. The potential to get something great in return for the risk we accept.
Investments can take a multitude of forms. Often when a person thinks of investing they usually gravitate to the stock market and real estate. However, there are many other investments to be made. A person can invest in a business venture in which they take part, or monitor passively from the side. They can invest in commodities such as gold, silver, or platinum. When it comes to investing, the sky is the limit. With so many options available, it is certainly in every person's best interest to consider all the options for their selves.
I believe that investment of time and money in education are very important as well. I do not mean in the traditional sense, such as college. I mean in experience and training that one can do in their free time. Even the act of making both bad and good investments is an education in itself. In fact, losing money in an investment can often lead to more education than if we were to come out successful.
Your Risk Tolerance
Before making any investment, the first thing that needs to be decided is your tolerance for risk. Does the thought of losing all your money make you sick? Does it excite you? Do you have any experience investing? What are your expectations for the investments you have made? Are they realistic?
This requires you to be very honest with yourself. Keep in mind that your tolerance may very well change as your experience grows. As such, you need to re-evaluate your tolerance from time to time to make sure you are invested correctly.
I believe firmly in risk taking with money, but not at the possibility of losing financial stability. Do not gamble. Take some time and be very intentional about money used for investing purposes.
Save money first and then, after a time, begin to invest. Remember the firm foundation of your plan is in the saving of money. Investing can, and should, be an integral part of your financial picture, just make sure the foundation is set before taking risks.
Build the safety net of saving and then take the leap of possibility in investing.