Bankruptcy Can Strike Anyone
People often think that making loads of cash is all you need to ensure your future. However, this is not true. Just consider the path taken by these famous celebrities. Mike Tyson could have lived like a king with his millions of earnings. However, the star chose to live a lavish life that easily ate all of these. Instead, he was reported to have $24 million debt in 2004. Nicolas Cage found himself in a not-so-desirable position when he made some seriously bad investments. He bought himself a pyramid (for him to be buried in) and trivial things the skull of a dinosaur. This was not enough to drive him to bankruptcy but it was a close call. These are perfect examples of investments that have gone bad.
Good Investments Versus Bad Investments
So what types of properties should you invest in? Property investments usually fall under short-term or long-term investments. Both may have the characteristic of appreciation depending on the economic trends. If this is the case, how will you be able to differentiate the good from the bad?Good investments are properties that only havethe possibility of appreciating in time. Bad investments on the other hand are those that are highly depreciable or easily rendered useless. If an investment is making you more money, then this is considered good investment. If it’s draining your bank account for no apparent reason, then you just bought yourself a bad investment.
Short-term Investments and Long-term Investments
Should you go for long-term or short-term investments? Which one is better? The answer depends on how you long you are willing to wait for these to appreciate. Short-term investments are ideal if you want something that is highly liquid. These could last from a few months or even weeks depending on the type of investment. These usually promise fast growth and gives the investor the added security that the money invested could be returned after a short time. However, these types of investments are highly volatile. While these promise high returns, you could also lose your investment in an instant if economic fluctuation is not desirable. Long-term investments on the other hand could take years before these appreciate. Compared to short-term investments, these are considered more stable but not ideal if you want to make money fast.
Protecting Your Investments
Whether it’s a short-term investment or a long-term investment, you have to understand how the mechanics work. If you plan to work with an investment manager, then you must have educated yourself in some way to prevent possible pitfalls in the future. Just like what Robert T. Kiyosaki said in his book, Rich Dad, Poor Dad, “Money is a form of power. But what is more powerful is financial education. Money comes and goes, but if you have the financial education how money works, you gain power over it and begin building wealth.” Never dive into an investment just because everybody else is doing it. This is your money and its’ okay to demand from your investment manager regarding the pros and cons of the property investment.
Having the Right Mindset for Investing
Out of the many types of industries gracing the world, the most number of billionaires were reported to engage in investments. It’s only indicative of how the rich get richer. What money they already have are reinvested to make them some more money. Whyare some people are able to do this and why some aren’t? It’s because most people were trained to have the “employee” perspective instead of the “investor” perspective. When people go to college, they already took it within themselves to become employees instead of the possibility of becoming rich one day. Although investing can now be done by anyone because corporations now allow you to buy common stocks, this is not taught in schools. People will usually do what they know and they often emulate the footsteps of their mentors, namely their parents or teachers. However, this mindset could be restructured by changing your beliefs with regard to your ability to make more money in the form of investments.
Choosing the Right Investment
Now, examine your goals. Investing should come with a purpose. Is it going to be used to fund a business? Will this be used for your child’s college fund? Or are you investing to ensure that you have money to fund your retirement? With your goals laid down, you can now choose whether to go for short-term investments or long-term investments. You may not be a celebrity and you going broke will never be broadcasted over the television. Nonetheless, you have the right to financial freedom and investing is one way for you to ensure this. You have the power to break free from the reasons why people fail to become rich.