This post will be about investments. Though I have not previously taken much interest in investments, reading through Paul Clitheroe's advice has led me to investigate more. Since I have not really begun to earn my own money yet, considering investments isn't on the top of my priority list. How can I invest when I've just enough to spend for a month before my next allowance comes in?
However, I do understand that investing is one of the keys to financial success. My father has recently invested in a diverse range of investments though previously he had not because of the risk involved. I suppose all the money he earned when I was younger went towards supporting the family (my mother does not work); but now he has bought shares in several different companies and also purchased 3 types of property. I'm happy to say that he has profited from the investment in shares so far. I suppose the apartment's rental payments will take awhile to cover back its original cost, much less bring in money; but it is another asset.
My father did take some of my savings from when I was a child, and invest them for me. So technically I do have investments, but I didn't do the homework. He foresees that the shares he bought from a Malaysian telecommunication company will yield a large profit after several years.
I was intrigued by the no.1 key to successful investing: to invest in something you understand. Prior to this, I assumed that by looking at a company's previous performance, or maybe it's forecasted return, one could determine if it would be a good investment. I guess that isn't all that matters however, which probably limits me to buying shares from say... McDonald's? But those shares aren't cheap. My friend recently recommended to me to buy shares in Suncorp... because the share price isn't too expensive. I've looked through its share webpage, and seen its past performance. Though it looks like it will give me good returns in the future, I'm still hesitant to part with my meagre savings to invest when I don't know that much about it.
Another eye opener reading this chapter was that shares have more advantages than property does. I always thought that investing in land, or a property, would not go far wrong rather than buying shares. Now I realize that there is a lot more to investing in property than meets the eye. Drawbacks like no diversification to minimize risk, not as flexible as shares, and higher fees never occurred to me before. I now understand that shares may be a more viable option for me as an investment especially in the near future because it is less risky and doesn't require a hefty sum of payment each month. It also could be safer to start off with, so I can limit the amount I'm willing to invest. I believe that there are do's and don'ts in the investment game, and one has to be smart to earn off it, no matter if its property or shares.
Though I've learned much about investing, and I believe Paul Clitheroe's advice will be still very valid in the future when I start to earn my own money, I'm still going to bide my time before I dip into the investment pool and for now stick to earning money from my savings in the bank.
Til I return.
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