Introduction

Investing is the process of using your money to generate more money by becoming the owner of valuable assets. These assets can grow your wealth in two ways: 

(i) by increasing in value so you can sell them later for a higher price; or 

(ii) by sharing their profits with you through dividends, interest, or rent. 

In both cases, the key idea is simple: own quality assets that produce value over time.

Core Concepts

At its core, investing means exchanging your money for assets. These assets have to be things that have the potential to grow in value or generate income. The most common examples include stocks, real estate, and bonds, but there are many other types of assets as well.

When you invest in a stock, for example, you become a partial owner of a business. If the business grows and becomes more valuable, so does your share of it. You might also receive a portion of the company’s profits in the form of dividends. 

The critical difference between investing and saving is that investing involves fluctuations in the value of the assets, which can be perceived as risk. 

The whole point then, is to manage that “risk” so you can take advantage of it.

Take Action

So, are you ready to stop letting your money sit still and start putting it to work? In the next post, we will walk through the first real steps of investing. They might look simple, but they’re the base of everything. We won’t. Let’s do this the smart way.