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Topic 3: Investing Is Risky?
When
we tell our friends and family on
how inflation and compounding will kill us slowly and when we say that
We
Cannot, Not Invest, the reply is always almost the same, “But
Investing Is
Risky!”
Let us set the records straight once and for all…
We will illustrate the value of $1 when it falls into the hands of different investors.
Same $1, Different Destiny
Although this is a hypothetical example, but it is supported by statistics and real life people everyday and everywhere!
Choice 1: If you are a Non Investor…
If you choose not to invest, we have already illustrated that your $1 is destined to erode and become of less value over time. Because you do not grow your $1 at a rate that can match inflation, you are destined to become poor. Or alternatively, you will need to work very hard or build your own business to earn more $ just to keep up!
Choice 2: Be a Poor Investor…
Obviously nobody will consciously choose to be a poor investor, but the truth is that most investors start by becoming a poor investor. Hot tips or intuition are the main strategies of these group. They may even make some money initially and feel that they have “got it”. They start boasting about how much money they make but do not have proper education nor a well planned investment strategy. Soon, they start to lose money but do not learn from it. Some began to put in more money, hoping to recoup. “I managed to make money once, I can do it again” is their man motivation and motto. Before you know it, they erode their wealth and savings away, treating the stock marketing like a huge casino. These are the people who formed the impression in many people’s mind that investing is Risky!
Choice 3: Be a Trained and Educated Investor!
This is the choice you have decided to take since you are in the course. Looking at the graph, it does not mean that you will not lose money if you are a trained investor. Because of how the stock market moves, there are times where your investments will seem to lose its value. But this is part of the game plan (which we will explain in the following segments). But non-investors who are not financially educated do not want to take the fact that their investments can potentially go down, they decide not to invest and rather let their wealth erode away with inflation. Or they choose to hand their money over to experts who help them erode their money way faster.
But ultimately, the educated investor will win the Money Game, riding on the power of Value Investing and Compounding Effect.
By the way, if you have not done so, join us for the next free live preview [Link]
It should not be of surprise that Compounding Effect is brought up again. We have illustrated how deadly it can be. But to an educated investor, it is the best thing that has be “invented”.
Compounding Effect is happening whether you care about it or not. To an Educated Value Investor, compounding effect is the KEY to success. Let’s take a look at Why?
Let us take a $10,000 investment and put it into the hands of different investor. Let us see what happens in 40 years.
*Assuming
with proper money management and no
adding of capital.
When we show this table to participants, many of them will think that it is important to put their investments in the right hands. The Key is in fact, training you to be the right investor.
Also, the term “Investing is Risky” applies to Poor Investors. And there are many poor investors out here trying to scale the investing mountain without proper training and skills. At the same time, if you are a non-investor, it may not be risky, but it is a sure road to financial disaster. So, you have to be educated and trained to invest your money.
At this junction, I can already hear some of you saying, “But I do not have $10,000 to begin with…” If you are saying that, it means that you have not fully understood how powerful the Compounding Effect can be when you trained yourself to become a value investor.
Perhaps some of you do not have $10,000. But could you afford to find $1 a day? How about $2? How about $5 or what if you can just save $10 a day? $1 a day would be $365 a year. And $10 is only about $300 per month.
And lets see what these $1, $2 or $10 can do if you know how to invest and compound.
*
Assuming that
Amount is invested once a year at year end.
This table clearly illustrates that even with $1 a day, you can become a millionaire and more in 40 years as long as you are a trained investor!
In the next session, you will learn some quick market strategies to help you win in the market.
By the way, if you have not done so, join us for the next free live preview [Click Here]
Let us set the records straight once and for all…
We will illustrate the value of $1 when it falls into the hands of different investors.
|
Same $1, Different Destiny
Although this is a hypothetical example, but it is supported by statistics and real life people everyday and everywhere!
Choice 1: If you are a Non Investor…
If you choose not to invest, we have already illustrated that your $1 is destined to erode and become of less value over time. Because you do not grow your $1 at a rate that can match inflation, you are destined to become poor. Or alternatively, you will need to work very hard or build your own business to earn more $ just to keep up!
Choice 2: Be a Poor Investor…
Obviously nobody will consciously choose to be a poor investor, but the truth is that most investors start by becoming a poor investor. Hot tips or intuition are the main strategies of these group. They may even make some money initially and feel that they have “got it”. They start boasting about how much money they make but do not have proper education nor a well planned investment strategy. Soon, they start to lose money but do not learn from it. Some began to put in more money, hoping to recoup. “I managed to make money once, I can do it again” is their man motivation and motto. Before you know it, they erode their wealth and savings away, treating the stock marketing like a huge casino. These are the people who formed the impression in many people’s mind that investing is Risky!
Choice 3: Be a Trained and Educated Investor!
This is the choice you have decided to take since you are in the course. Looking at the graph, it does not mean that you will not lose money if you are a trained investor. Because of how the stock market moves, there are times where your investments will seem to lose its value. But this is part of the game plan (which we will explain in the following segments). But non-investors who are not financially educated do not want to take the fact that their investments can potentially go down, they decide not to invest and rather let their wealth erode away with inflation. Or they choose to hand their money over to experts who help them erode their money way faster.
But ultimately, the educated investor will win the Money Game, riding on the power of Value Investing and Compounding Effect.
By the way, if you have not done so, join us for the next free live preview [Link]
Compounding
Effect – The Double Edged Sword
It should not be of surprise that Compounding Effect is brought up again. We have illustrated how deadly it can be. But to an educated investor, it is the best thing that has be “invented”.
Compounding Effect is happening whether you care about it or not. To an Educated Value Investor, compounding effect is the KEY to success. Let’s take a look at Why?
Let us take a $10,000 investment and put it into the hands of different investor. Let us see what happens in 40 years.
|
When we show this table to participants, many of them will think that it is important to put their investments in the right hands. The Key is in fact, training you to be the right investor.
Also, the term “Investing is Risky” applies to Poor Investors. And there are many poor investors out here trying to scale the investing mountain without proper training and skills. At the same time, if you are a non-investor, it may not be risky, but it is a sure road to financial disaster. So, you have to be educated and trained to invest your money.
At this junction, I can already hear some of you saying, “But I do not have $10,000 to begin with…” If you are saying that, it means that you have not fully understood how powerful the Compounding Effect can be when you trained yourself to become a value investor.
Perhaps some of you do not have $10,000. But could you afford to find $1 a day? How about $2? How about $5 or what if you can just save $10 a day? $1 a day would be $365 a year. And $10 is only about $300 per month.
And lets see what these $1, $2 or $10 can do if you know how to invest and compound.
Various
Amount Compounded at an Annual 20% Returns
|
This table clearly illustrates that even with $1 a day, you can become a millionaire and more in 40 years as long as you are a trained investor!
In the next session, you will learn some quick market strategies to help you win in the market.
By the way, if you have not done so, join us for the next free live preview [Click Here]
Topic 1: Welcome to the World of Investing
Topic 2: The Destructive Power of Compounding
Topic 3: Investing is RISKY?
Topic 4: Basic Lesson of Value Investing
Topic 5: 3 Steps to Identify A Winning Business
Topic 6: Getting Competitive Advantage
Topic 7: Understanding Financial Ratio
Topic 8: Pushing your Education further