Hi friends,

Today we discuss about some interesting things from one of the best book for beginners “Learn To Earn” by Peter Lynch. In this book there are many things that must know before investing.

 


There are five major things in which people invest in it.

 

1.  Saving Accounts and FD or RD

 

 These types of investing are the safest investing consider in market. But these investment are not considered as investment because it losses their value day to day. It’s because of inflation rate increases with 4-7% or more and average inflation rate is almost 7% year on year and your money invested in this class your value of money grow with 4% annually. So you lose your money.

One thing that makes this popular is risk free investment. Is it right? Think about it.

 

2.  Collectible Assets

 

Anything that antique that may be stamp cars, old coins, paintings, art, etc. When we invest in such asset and hoping that it will sold on higher prices than it’s now. There is two things happen – first things get more desirable as they get older and second is inflation can’t beat its value.

According to Warren Buffet Gold is also belongs to this asset class.

 

3.  Real Estates

 

This is the better investment than two of them. You can get many benefits in this asset like tax deduction. You can get regular income from this asset. Many of entrepreneurs make their fortune through this asset class. But only things that it requires more money to invest. And you have good credit to take loan from banks.

 

4.  Bonds

 

Bond are basically loan that company or government owe to the people who invested in bond with certain interest rate for limited time frame. If company get prosper you don’t get any benefit from company. It is consider as less risky investment. One thing that you must know that this investment become risky in long term bonds because in long term like 10-20 years your money get affected by inflation CAGR.  

 

5.  Stocks

 

This is the best investments you’ll ever make, outside of a house.

You don’t have to feed like pets. It doesn’t break down the way cars does, nor does it leak the way real estate. You don’t afraid to lose like the way collectibles does. If your certificates that proves you own stock might be stolen or burned up, but company send you another. If you invested in good company then the stock price of company increases and your investment too. One thing that make investor smile is dividends. Dividends are the company profits that distributed to shareholders of company.

 

Let’s talk about other fact.

When we discuss about investing we can’t avoid time because it is the most important aspect of this journey. If you invest your money in good company that have evergreen products and regularly updated and innovating new products. That company get prosper in long run and you too. You should invest your money for 15 to 20 year if you want multiplies your worth.

You are beginners and don’t know how to pick stocks you should start in mutual fund with less risk. It can’t bother with details study (Balance sheet, Income statements, Cash flow and annual reports). All these things done by fund managers that have experience as well as knowledge. But you should pay a commission for their services.   

You can even learn to stock picking. You can easily learn how to do research any company. There is many readymade tools out there that make things simple as well as easy.

If you want to know how to read and analyse any stock very simple language then follow our post.


Congratulation you take one more step towards your financial freedom.

 This Summary from "Learn To Earn"

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