Hello, class. Welcome back. I hope everyone is well rested and ready to get going because we are going into something with a little more depth today. And we are jumping right in so get ready.
We are going to go over investing.
Investing is the cornerstone of building wealth. Without it, it is virtually impossible to become “rich”. In fact, it is impossible!
One might wonder about that statement that just came out of my mouth and ask “What about lottery tickets??”. Well, in order to win the jackpot, wouldn’t a person have to go and purchase a ticket?
In other words, wouldn’t a person have to invest in a ticket. This is the basis of investing: Putting money into something, hoping that it will produce more money than one put into that something.
The idea itself is simply and many of us apply it daily. We use money to purchase professional attire so that we can go to a job interview in hopes of getting a job. We use money to buy gas so that we can go to work and make more money. This list goes on and on.
Now, the difference between this and the word investing is purely nuance, aka it exists only in our minds. So what is the actual difference? Investing raises the thoughts of stock markets, Dow Jones, recessions, etc: stuff that would bore the average person to tears.
Because of the complexity associated with it, people tend to avoid this type of “investing” all together. They don’t understand and therefore, they leave it alone.
Now, investing can actually be a little complicated. BUT! It doesn’t have to be. And besides, you all are here to learn, right? Before I jump into the specifics of “investing”, I feel as though you aren’t completely sold on the idea of investing.
“Why should I invest in the first place?”
“Why should I risk my hard-earned money for something that has been compared to gambling?”
Those are all questions that people have asked before and don’t worry: we are going to cover them all.
Why should one invest and potentially lose money? That one is an easy one. One with an answer that might shock you. Or not if you already taken an economics course before mine.
We already are. Every day, every second. We are losing money. I am not talking about opportunity cost (The time doing one thing could be better spent doing something else.) I am talking about inflation. It is how money itself loses value. How can it do that? Well, I remember how my grandmother constantly told me how stuff was cheaper back in the day and how outrageous prices are today.
What she was complaining about? In the most simple terms possible, inflation. It’s how prices rise over time. Well, if prices rise and one’s level of income stays the same, then the amount of stuff one can buy decreases. For example, if a pack of gum costs 0.50 cents and I only have a dollar, then I can buy two packs of gum. But, if the price of the pack rises to a dollar, I can only buy one pack.
If I increase my income using investing, then I could potentially keep up with inflation. (In fact, I can actually beat inflation and have more money in the long run!)
Second, one can make those golden years shiny. No one wants to be forced to work for the rest of one’s life. And one doesn’t have to be work. With investing and something called the rule of 72 (I will cover that late on, but basically, it is used to determine how fast one money doubles when investing.)There are a GREAT many examples of individuals saving and investing their money and not working at ALL in retirement.
In fact, there are some of them that save enough to actually retire EARLY and still have enough money to live comfortably. (A lot of these people follow a method call F.I.R.E. – Financial Independence Retire Early. Again, I’ll cover it in another class.)
Third and finally, it means more money in the long-term. Now, probably not immediately. But, it is very conceivable for someone to have invested for a while and have millions of dollars to play with at the end. With that fact in mind, who would be willing to turn down a method that people have been using for decades to get rich?
And there you have it. At this point, we have covered what people think of when they hear the word “investing” and why you should invest. Now, we can finally go over ways you get started investing.
Yes? The time?
Oh. We did run out of time, didn’t we? Well, good thing this is a two part class. Go ahead and take a break and we will start back here.
Write a comment if I made a mistake or if you just want to open the floor for discussion.
(Sorry, guys! I haven’t had time to write some ways that one can use to invest. Don’t worry! I will put it up as soon as I can! Thank you so much for all of your support!)
Professor Stealth Wealth 