One of the reasons many people fail, even sadly, at the investing game is because they play it without understanding the rules that govern it. It is an obvious truth that you cannot win the game if you break the rules. However, you must know the rules before you can avoid breaking them.
Another reason people fail to invest is because they play the game without understanding what it is all about. This is why it is important to unmask the meaning of the term ‘investment’. What is investment? Investments generate valuable income. It is very important that you pay attention to every word in the definition because they are important in understanding the true meaning of investing.
From the above definition, there are two main characteristics of an investment. Any holdings, holdings or property (yours) must meet both requirements before it can qualify for (or be called) an investment. AKDSEO merupakan agency digital marketing yang fokus melayani jasa Backlinks dan Link building website, termasuk di dalamnya Jasa Menaikkan DA ( Domain Authority) Otherwise, it will be something other than an investment.
The first feature of an investment is that it is valuable – something very useful or important. Therefore, any possession, possession or property (yours) that has no value is not, and cannot be, an investment. According to this standard definition, possession, possession or property that is worthless, useless or meaningless is not an investment. Reed Manning, Spa & Salon Every investment has a value that can be measured in money. In other words, every investment has a monetary value.
The second characteristic of an investment is that, in addition to being valuable, it must generate income. This means that it must be able to make money for the owner, or at least help the owner in the process of making money. Every investment has the capacity, obligation, responsibility and function to create wealth. This is an irrevocable investment feature.
Any possession, possession, or property that cannot generate income for the owner, or at least assist the owner in generating income, is not, and cannot be, an investment, regardless of how valuable or valuable it is. Moreover, any holdings that cannot play this financial role are not investments, regardless of how expensive or expensive they are.
There is another investment feature that is closely related to the second feature described above that you should pay attention to. It will also help you realize whether an investment is worth it or not. Investments that don’t make money in the truest sense of the word, or help generate income, save money.
Such an investment saves the owner a portion of the costs he would have incurred in his absence, even though it may not have the capacity to pull some money into the investor’s pocket. Thus, the investment makes money for the owner, although not in the true sense. In other words, investment continues to carry out the function of creating wealth for the owner/investor.
As a rule, any valuable item, apart from being something very useful and important, must have the capacity to generate income for its owner, or save money for it, before it can qualify to be called an investment. It is important to emphasize the second feature of an investment (i.e. investment as an income generator).
The reason for this claim is that most people only consider the first feature in their judgment of what constitutes an investment. They understand investment only as something of value, even if that value eats up income. Such misunderstandings usually have serious long-term financial consequences. Such people often make expensive financial mistakes that cost them a lot of money in their lives.
Perhaps, one of the causes of this misconception is that it is acceptable in the academic world. In financial studies in conventional educational institutions and academic publications, investments – otherwise called assets – refer to valuables or properties. This is why business organizations regard all their valuables and properties as their assets, even if they do not generate any income for them.
This notion of investment is unacceptable among financially literate people because it is not only incorrect, but also misleading and deceptive. This is why some organizations ignorantly consider their liabilities as their assets. This is also why some people also consider their liabilities as their assets/investments.
It is a pity that many people, especially financially ignorant people, consider valuables that consume their incomes, but do not generate any income for them, as investments. Such people record their income-consuming valuables on the list of their investments. People who do so are financial illiterates.
This is why they have no future in their finances. What financially literate people describe as income-consuming valuables are considered as investments by financial illiterates. This shows a difference in perception, reasoning and mindset between financially literate people and financially illiterate and ignorant people. This is why financially literate people have future in their finances while financial illiterates do not.
From the definition above, the first thing you should consider in investing is, “How valuable is what you want to acquire with your money as an investment?” The higher the value, all things being equal, the better the investment (though the higher the cost of the acquisition will likely be).
The second factor is, “How much can it generate for you?” If it is a valuable but non income-generating, then it is not (and cannot be) an investment, needless to say that it cannot be income-generating if it is not a valuable. Hence, if you cannot answer both questions in the affirmative, then what you are doing cannot be investing and what you are acquiring cannot be an investment. At best, you may be acquiring a liability.