| |
What is investing? Any time you invest, you are
putting something of yours into something else
in order to achieve something greater. You can
invest your weekends in a good cause, you can
invest your intelligence in your job, or you can
invest your time in a relationship. Just as you
do each of these with the expectation that something
good will come of it, when you invest your savings
in a stock, bond, or mutual fund, you do so because
you think its value will appreciate over time.
|
|
| |
|
|
| |
Investing
money is putting that money into some form of
"security" - a fancy word for anything
that is "secured" by some assets. Stocks,
bonds, mutual funds, certificates of deposit -
all of these are types of securities. As with
anything else, there are many different approaches
to investing. Some of these you've probably seen
on late-night TV. A well-dressed, wildly positive
(though somewhat whiny) young man sits lazily
waving palm fronds and shakes his head over how
incredibly easy it is to amass vast wealth - in
no time at all! Well, hey! That sounds fine! However,
discerning minds will wonder: If it were so easy,
wouldn't everyone who saw the same pitch be rich?
Then, too, you always have to send some money
to learn the secrets. So we suggest you take the
$25 you'd spend on the hardcover EZ Secrets to
Untold Billions book and the $500 you would shell
out for the EZ Seminar, and invest it yourself
- after you've learned the basics here.
|
|
| |
|
|
| |
Time Value of Money :.
|
|
| |
|
|
| |
Is
a dollar always worth a dollar? OK, you sly fox
- you caught us, it's a trick question! And you
guessed it - a dollar is not always worth a dollar.
Sometimes a dollar is only worth 80 cents, and
sometimes it is worth $1.20. (Say! You give us
your dollars worth $1.20, and we'll give you ours
worth $0.80, in an even trade! Have we got a deal?)
|
|
| |
|
|
| |
But let's think about this. How can it be?
The value of a dollar changes dramatically depending
on when you can take control of the dollar and
invest it. The critical variable in the exact
value of a dollar is time.
|
|
| |
|
|
| |
If someone owes you a dollar, do you want him
to pay you today or next year? (Yes! Another
trick question! The answer is, "Today.")
With inflation consistently destroying the purchasing
power of a dollar, a year from now a dollar
will be worth slightly less than it is today.
"Inflation" is an economic term used
to describe the gradual tendency of prices to
rise over time. If inflation is 2% per year,
that means that prices, on average, will rise
2% over the next year, which in turn means that
your dollar can purchase 2 cents less in a year
than it can today. That's right, all you mathematicians
out there - with 2% inflation, a dollar today
is worth only 98 cents in a year.
|
|
| |
|
|
| |
However, if you got the dollar back today,
you could invest it. If you invested it (along
with a few of its cousins, we hope) in the stock
market, and your investment returned 10% over
the course of the year (which is somewhat less
than the market average has historically returned),
then you'd have $1.10 at the end of the year.
So your money would be growing instead of shrinking,
and you'd be staving off the negative effects
of inflation.
|
|
| |
|
|
