| There is a misconception of what investing is. The | | | | in great condition and the price is way too low for |
| typical impression is that it has to do with the stock | | | | what your estimation of the bike should be worth. |
| market or real estate, however investing money is | | | | You pay them the asked for $70 and you re |
| much simpler than that. The above conception keeps | | | | advertise the same bike after giving it a thorough |
| many people out of investing because it sounds too | | | | clean and detail, for $150 Someone in the next block |
| hard and complicated. Also, most beginning investors | | | | answers your ad and negotiates with you and buys |
| have small seed capital, with broker commissions and | | | | the bike for $120 |
| such it seems a real barrier to invest in these | | | | What has happened here? Something quite incredible. |
| traditional investment mediums. | | | | You invested $70 but you got back your $70 and |
| The essence of a true investment lies in the return. | | | | you got another $50 for your troubles. That is a |
| When ever you spend a block of money, large or | | | | 70% increase! The bank would have paid you 7% on |
| small, that is designed and does give you a return, | | | | that $70 after an entire year has passed. You |
| you can say it was an investment. The main thing to | | | | completed this investment in under a week. This can |
| remember about investment is that risk is the main | | | | be considered a very successful investment. Heres |
| name of the game. | | | | why. |
| Any investment will have a measure of risk and most | | | | Before you bought the bicycle, you considered it |
| investors use the simple bank deposit as a bench | | | | from a very prudent perspective. You spent several |
| mark for risk and reward. A bank is guaranteed by | | | | hours looking at bikes and familiarizing yourself with |
| the government, so the risk is unusually low for an | | | | the current micro climate of bikes in your area. You |
| investment. But also, so is the return or the interest | | | | ascertained, it was worth at least $140 but you also |
| rate a bank will pay you for depositing your money. | | | | expected it to sell quite quickly at a little lower price. |
| Nevertheless, this investment is the golden mean and | | | | The risk question you asked yourself, is will this bike |
| is used to compare other investments with. The two | | | | sell, if the worst thing happened and absolutely |
| things you compare is risk and reward. The higher | | | | nobody was interested and I had to price the bike |
| the risk, the higher the expected reward, but not | | | | $70 Would I get my money back? If the answer to |
| always. | | | | that question is in the affirmative, then you have a |
| An investment can be as simple as spotting an | | | | good low risk, high return investment. Your next step |
| opportunity in the classifieds. Imagine you noticed the | | | | would be to compound that $120 into another 50% |
| neighbor down the road is selling a mountain bike. It is | | | | to 70% return. |