Investing Made Simple

May 26th, 2007

Learning to invest money can be as hard or as easy as you want it to be. You can learn the basics in just a few minutes. Many of the reader’s on this site already know how to invest, and know many of the terms but there are always some reader’s who stumble upon this site and want to learn some investing basics.

Myth: I don’t need to learn how to invest because the professionals do it for me.

Wrong. The professionals make money for themselves. If they are so good at investing, what are they doing taking the subway to work everyday? They are called stockBROKER’s for a reason.

The truth is you know more than you need to already. You’re smart enough to realize when your company is busy or not. You’re smart enough to recognize when one of your suppliers is booming. You’re smart enough to recognize a company that is expanding fast. It’s as simple as noticing that one store seems to always be busy.

We are surrounded by companies. You shop at companies. You buy from companies. You work for companies. You know more than you realize.

Example #1

A mechanic in the diesel industry hears that one of the manufacturers of diesel engines has designed engines which meet the specifications that are in legislation for reducing emissions. The mechanic also hears none of the other engine manufacturers have designed an engine to meet those specifications yet. He has potentially found a good investment. The mechanic then hears the engine manufacturer has completely sold out the next year of engines to be produced. The engines aren’t even made yet and they’re already sold! In fact, the company is so busy they have placed a limit on how many engines they will sell to China, or else they wouldn’t have any engines for their other markets. This tells the mechanic the company is BOOMING. Guess what. The mechanic knew this before the stock price had changed. This is a true story. The name of the diesel manufacturer is Cummins.

Example #2

The same mechanic in the example above spends his days fixing trucks. He begins to notice that one trucking company in particular is buying lots of new trucks and upgrading their fleet of old trucks. He notices they are getting very busy. He can safely assume they are growing. This could be a good investment. And guess what? He realized all this before any of the stockbrokers did. The rise in sales won’t come for a few months or even a year. He’s already noticed the ramping up of vehicles to meet the increasing demand before any of it hits the income statement!

Example #3

An 8 year old child wants some toy for Christmas. Every other parent seems to realize their kids want this particular toy. You may have just stumbled across a good investment. Look up the company name and do a quick search.

Summary

You can learn to invest. It doesn’t have to be boring. You can even get some help. There are all sorts of investment newsletters available on the internet which can alert you to some great investment opportunities. Often times the best investments you can make are in the areas that you have the most knowledge, expertise and interest in.

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