Is your understanding of investment doing your money damage?
So you think you understand the REAL meaning of investment?
You may have seen me talk about investment in the past, but did you realise that investing is a subjective term? It's not as precise as many incorrectly assume, and means different things to different people.
Stop and think about it: what exactly does investment mean to you?
Here are a few ideas to help you decide.
Do Not Take the Term for Granted
It's easy to hear a word and just presume there is a clear-cut meaning that everyone follows.
Wait! This is not always the case.
I recommend considering investment in two clearly-defined classifications: passive investing and active investing.
Passive investments are extremely typical nowadays, and your financial advisor has most likely advised this option to you. They're the long-term, "set it and forget it" investments. Most of the time this means property, superannuation funds, or anything that needs little involvement on your front.
Some people choose this type of investment since it's safe, they don't have to do much once they've made the investment, and they can see nominal gains.
On the other hand, active investing might be more suited to you. Here's why:
- Small isn't enough: For some investors, simply staying ahead of inflation just doesn’t cut it. They want to develop genuine wealth through their investments, and they want it earlier instead of later on.
- You desire control: When you select a passive investment, there isn't much that you have to do besides paying taxes every year. When you choose an active investment it means you want more power to fine-tune your investments as you go.
- You want to maximise your money’s performance: With a passive investment, you are most likely satisfied with the results that the universe and markets give you. Active investing will enable you to have more control and the chance to maximise your return.
Are you an active or passive investor? What does investing mean to you? Leave a comment below, and make sure to follow this blog site for future posts.