Start Investing

As mentioned in the previous post, investing is a way of saving money for the future. It is the manner by which we grow our returns for the efforts that we put in, and being in capitalistic societies we measure the returns mostly by money. You could also put other factors for measuring this, and the bottom line is, a right investing is where after a course of time dt your investment grows by a positive increment dX

X ——————————> X + dX (after a time dt)

For example, the education that you had in your school and college is one of the best investments you woud have ever made. For your 50K * 4 years of expenditure, your returns are many times that amount, provided you had selected field closer to your interest and put efforts. If you had not put efforts or selected a bad area you lose most of your principal. Even if you had selected the right area, the returns will be few years after you start studying.

You can learn four things from this example. First, investment is not just putting money, but putting your brain in selecting the right area and once you steer yourself you to the right area, you put the right efforts.

Second, the time when the money was put in is much different from time you expect you take the returns. In other words, if you want the money to be doubled in a day, or expect returns next minute, you better to do horse gambling than invest. Investing is about patience and maturity.

Third, the returns should justify the investment. If you are going to put 1 million into some funky course that gives you a salary of less than 10K per month, u will never earn back the principal

Fourth, look for alternate investments and evaluate options. So, if you r given the option between investing 3 lakhs in a No.5 college with 2.5 lakhs in a No.6 college and investing the rest in good books and sports, you might select the second one that could give greater returns.

Once you understand these basics, you are all set to start investing.

Before, you begin investing do a lot of research. After all, its your money. Read a lot and dont fall for single articles or statements and go for a balanced view.

Some good investing magazines and sites that you must visit are:

Barrons, Wall Street Journal are must for US investing. Apart from that read Economist, Financial Times for world news and for india , I would suggest Economic Times, Financial Express & Business Standard.

Regarding sites, I would go in for Moneycentral.com, fool.com, investopedia.com, moneychimp.com for general investing knowledge and for indians you could go to valueresearchonline.com & moneycontrol.com.

Investing is just part of savings. The main difference between investing and other savings is the amount of time dt to get the returns. In other words, an investor should be patient to get his returns, while if you have savings that generally yield constant amounts, you could put in or take out any time. An example: you are starting a company. You have put a million dollars in it. You go the next month, can you get back the principal, leave alone the returns? But, in a year it might go to 10 million, as you start getting profits. Or you might lose everything. Everything is based on your efforts and selection. In comparison, you put the million in a bank, you might take it the next day (albeit with some penalty) and sometimes even with a small returns and in a year, it will grow in a similiar fasion – you will never get ten times of that, nor you might lose everything.

More on this next article—>