This post kicks off a new section of this blog, investing. Investing in and of itself is a monster topic. It’s the sole subject of thousands if not millions of books, newspapers, magazines and blogs. So I broach it with great humility and caution. My goals are twofold, to impart some basics and to lead you to sources where you can explore to your intellects’ capacity and hearts’ desire.

My definition: “Investing is a planned goal oriented creative action (in the now) which utilizes scarce resources in ways and combinations which lead to expected outcomes (in the future) that are greater than the resources invested.”

1)Resources – time and money
Obtain an education that leads to a career and working life-long income.

2)Resources – labor, money, intellect and management
Start a business premised on an original idea, it works, the company goes public and you make lots of money.

3)Resources – money and intellect
Purchase a combination of stocks and bonds now and each month thereafter in order to build a retirement nest egg for the future.

Let’s review the investment basics these examples have in common.

Goals – each example has a plan and goal

Application of resources (assets) – each example is a combination of limited resources

Reward – each investment has an expected outcome

Measurement – the expected outcomes in each plan are greater than the resources utilized.

Asset classes – each investment uses at least two asset classes; time, intellect, stocks, etc.

Money – each example uses money, what’s noteworthy is that money may be a function of prior savings or borrowed. Money is just another resource.

Risk tolerance – implicit in each investment is the knowledge that the investment could fail, i.e, you lose all or a portion of the resources invested. General rule, therefore, the greater the risk the greater the reward needs to be.

To be continued.

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About jaysanderscpa

Jay Sanders, CPA/PFS, CFP® "There's lots and lots of Numbers in business and your personal life but only some are relevant. The key is to know which one's matter, worry about them and forget the rest."
This entry was posted in Financial Literacy Basics, Investing and tagged , , , , , . Bookmark the permalink.

1 Response to Investing

  1. Love it Jay! What a simple approach to a HUGE topic. I appreciate your candor & humility in taking it on. Thanks for the great words and direction! Happy Easter!

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