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The best hotels in Puerto Rico â find your stay on the Island of Enchantment
10 Hobbies That are an Immediate Red Flag
Have you ever known someone and thought you liked themâuntil you learned about their hobbies? Then you get to know them and then youâre like, âWow, red flag.â Well, youâre not alone. According to Redditors, some of these seemingly unsuspecting hobbies are actually subtle indicators that someone has some big red flags. Do you know … Read more
How to match your World of Hyatt status to MGM Rewards for free perks in Las Vegas
Amador County, California VA Home Loan Information
Table of Contents What is the VA Loan Limit? How to Apply for a VA Home Loan? What is the Median Home Price? What are the VA Appraisal Fees? Do I need Flood Insurance? How do I learn about Property Taxes? What is the Population? What are the major cities? About Amador County Veteran Information […]
The post Amador County, California VA Home Loan Information appeared first on VA Home Loan Centers.
The difference between investing and speculation (or: The problem with Bitcoin)
Hold onto your hats, folks. It’s rant time!
Based on what I’m hearing on Facebook, Twitter, and in real life, it’s time for a refresher course on the difference between investing and speculation. Although these two concepts share some commonalities, they’re very different things.
Let me start by telling a story, one I’ve told many times before. It’s the story of the worst “investor” I’ve ever known: me.
The Worst Investor I’ve Ever Known
Before my financial turnaround, I didn’t really understand what the stock market was for. I viewed it as a sort of casino, I guess. I believed investors gambled on individual stocks and hoped that they’d outperform the rest of the market.
So, that’s what I did. I treated the stock market as if it were a casino. I’d pick a stock, put all my money into it, and cross my fingers. I took risky gambles hoping to strike it rich.
Unsurprisingly, I lost a ton of money.
- During the late 1990s, some friends and I formed an investment club. Each month, we contributed money and picked where to put it. We chose stupid, stupid stocks — whatever was riding high at the moment. When the tech bubble burst, so did our bankroll and our enthusiasm.
- In 2000, enamored by PalmPilot, I bought stock in the company that made the devices. I paid close to $90 per share. Just over a year later, the stock had lost 90% of its value. Oops.
- One of my friends worked for The Sharper Image. In 2007, the company was struggling and the stock was in the toilet. At dinner one night, my friend told me how management was trying to turn things around. Sounded promising, so I put my $3500 Roth IRA contribution into the company’s stock. The company soon went bankrupt and my 2007 IRA contribution is now worth nothing.
- During the banking crisis, I invested in Countrywide Financial. “Countrywide is on your side,” right? Wrong. Yet another stock that went to zero.
I wasn’t investing; I was speculating. I was gambling. I was trying to pick winning cards at the casino. But that’s how I thought the stock market worked.
The High Risk of Risk
After writing at Get Rich Slowly for a while, my viewpoint changed. As I became better educated, I realized that the stock market is not a casino. It’s a marketplace. It’s a tool that allows people to buy shares of businesses. (This is obvious, but trust me: Most people don’t understand this.)
When I buy a piece of one business, I’m taking on the risk associated with that business. We hear all the time that most small businesses don’t survive seven years, right? Well, even big businesses go under. Even big businesses lose money. There’s always risk associated with owning a business.
In the world of investing, “risk” is the probability that you’ll lose money. (There are many types of investment risks, by the way.) The notion of “return” is fundamentally tied to the concept of “risk”. The greater the risk — the greater the chance you’ll lose money — the higher your potential returns (gains) are.
One difference between investment and speculation is the amount of risk involved. When you put your money into something with minimal risk, you’re investing. When you put your money into something with high risk, you’re speculating. Like I said at the start, there are plenty of commonalities in the two actions — but the element of risk is a huge differentiating factor.
One way to mitigate risk is to own pieces of several businesses. Owning many businesses is even better. This practice is known as diversification. Diversification reduces risk. It allows you to enjoy the profits and benefits without getting screwed when one business goes under. This is investing. Putting all of your money into one stock and hoping that it increases in value is speculation.
Hereâs how many Marriott hotels actually have resort fees
“What If The World Ends?”
How do you prepare your investments for the end of the world? Or is that a dumb wager to begin with?
Maximizing Deal Profits
My guest today is my pal Blake McCreight, and today weâre talking about using the best exit strategies to maximize your profits. Sometimes itâs wholesaling or assigning, sometimes itâs rehabbing. Heck, sometimes you have to make your decision based on how fast you need the cash, or how much capacity you or your team has to put into, say, another rehab. Great lessons here to help you maximize your profits and your organizational capacity!
Tips to Spend Less Money
If you need tips to spend less money, you’ve come to the right judgment-free zone. I feel like I should introduce myself. âHello. My name is Elissa, and I am an unconscious spender.â
(âHello, Elissa.â)
âI give myself a $200 allowance every two weeks, but when the cash is gone, I use the credit card or hit the ATM. A hundred here, a hundred there. I feel like that Fast Cash $60 button is a slot machine in a casino!â
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