Prospective investors should need to determine whether they have the right personality to be an entrepreneur, because the demands of running a small business require a special type set of traits and skills.
New York City, New York (PRWEB) May 27, 2013
This primer published recently by FinancesOnline.com and titled "Stocks, Bonds, Real Estate and Small Businesses: Get Your Investment Basics Right" doesn’t blink when it flatly declares that working 9 to 5 will never make the ordinary person rich. It argues that the only way to building wealth is through investments. While acknowledging the risks inherent to this activity, the author declares that this risk should be embraced by ensuring that one is properly prepared for unpleasant surprises, if and when they happen.
The opening sections discuss the things a prospective investor should have in place to prepare for the venture:
- A knowledge of risk appetite. This will determine the kind of investment most suited for an investor’s capacity to handle risks.
- An emergency fund. At least three months’ worth of living expenses so the investor does not have to sell off investments at a loss should there be a sudden downturn.
- Paying debts off. Avoiding money lost through high interest rates is an investment decision in itself.
- A knowledge of capacity for savings, to ensure there is enough seed fund to start an investment.
Investing in retirement funds, to encourage the prospective investor to start saving early in life and also to take advantage of tax-friendly income from these funds.
- Protecting existing assets, so that investors or their families are properly insured from unfortunate events.
The author then provides brief but insightful descriptions of the most popular investment vehicles, starting with stocks, bonds, and other financial instruments. When an investor decides to directly participate in financial markets (rather than through pooled resources such as mutual funds) the author cautions investors to study a company’s history of innovation and invention, its control over the supply chain for the products it sells, presence in regional markets, handling of costs, prices, and competition, among other things.
Regarding real estate, the author emphasizes four major advantages. Aside from value appreciation and the potential to generate income the author points out that real estate can be leveraged to acquire more funds for other investments.
Lastly, the author discusses the attractiveness of a small business as an investment option. Here, the author emphasizes that prospective investors should need to determine whether they have the right personality to be an entrepreneur, because the demands of running a small business require a special type set of traits and skills. Also, the author provides several options for funding a small business. The full amount doesn’t have to come from the investor’s own pocket.
The full article “Stocks, Bonds, Real Estate and Small Businesses: Get Your Investment Basics Right” is available at FinancesOnline.com, and is the first installment in a series that will cover the gamut of investment options for the first-time American investor.