What You Should Know About CryptoCurrency – Part 1

What is CryptoCurrency?

CryptoCurrencies are Digital or Alternative currencies that don’t have any physical form. Cryptography is used for such currency to make secure transactions. In Such Transaction, information or transaction details are converted into such code that is uncrackable. So everything in such transaction is traced by a code. Usually, CryptoCurrency is not controlled by any country, so the value of such currency is determined by the market.

Why was CryptoCurrency Invented?

Cryptocurrency started with the invention of Bitcoin in 2009 by the unknown entity known as “Satoshi Nakamoto”. A start-up company producing a new form of money – digital currency was born. This decentralized currency is not controlled by governments or any organization and as such is open to all. It has never and will never be afforded copyright. Currently used by over hundreds of thousands of people per day, and there is no middle man or no credit company. Bitcoin is an accepted currency on such major sites as WordPress, Piratebay, Reddit, OK Cupid  and several others even as it's acceptance increases. Today there is a whole host of other digital currencies which work on the same basis but use different code eg. E-Dinar Coin, Ethereum, Dash, Litecoin and Primecoin, etc.

Cryptocurrencies are legal all over the world with the exception of Iceland; although there have been restrictions made to their usage in other countries such as China. The biggest downfall of a Cryptocurrency is the potential for fraud through inside party infiltration of security systems: however, whilst this is logistically possible, but the cost would be sky high and unbelievable skill level would require. “Miners”, or members of the public, rewarded for successful handling of cryptocurrency, use resource-intensive software to help secure the network allowing it to mathematically solve equations and directly impede attempted fraud.

A cryptocurrency only has value in its exchange – it has no inherent value – much the same as a ‘conventional’ currency. A dollar is only worth what someone is willing to give you for that dollar. If everyone stops accepting the dollar – it becomes worthless. Hence cryptocurrency is only worth what someone will exchange for it. There is no Federal Reserve to issue new digital currency, theoretically making it more stable. New cryptocurrency is released, Bitcoin or E-Dinar Coin, for example, releases more each year but the exact amount decreases proportionally year on year; the Federal reserve reissues in a reactionary fashion whenever it is required  Thus, the more business and people that accept a form of a cryptocurrency – the more stable it will become.

What makes CryptoCurrency Different

So what makes cryptocurrency so different from just using regular digital money? Well, there are a few key differences that we will cover in this article. 

Firstly, there’s no central bank anywhere that determines its value or controls the flow in which new money is being created. This makes the manipulation of the amount of money in existence not controlled by for the usual institutions we are used to. For example, the US dollar is controlled by the Federal Reserve, but Bitcoin, which is one of the most popular cryptocurrencies today, is controlled by an algorithm that no individual person, company or country can change.

The value of a fiat cryptocurrency is really just based on what other users are willing to give up for it. No countries are involved, so the welfare of a particular nation’s economy doesn’t affect currency value. Since value is based solely on supply and demand, it functions like the way commodities do in the stock market.

Another aspect that differentiates cryptocurrencies from regular currencies is the low transaction fees to transfer money all over the world. The fee is independent of distance, country borders etc.. This makes it much easier to transfer enormous sums of money globally or to make micro payments between people who live in different countries.

Why do some people love cryptocurrency where some people see it as pure evil?

There are multiple reasons to love it or hate it. For example, the transaction made using Cryptocurrency cannot be traced like Credit Card or Bank Account that is usually linked to a specific transaction. All the transactions made using cryptocurrency (e.g. Bitcoin) can be traced forever with the specific “alias” or key that performed it. This makes for a lot of discussions and there are arguments that Bitcoin is both untraceable and 100 percent traceable. Obviously, that has an immediate appeal in shadier sectors, and even though media often portrays cryptocurrencies as something only used by criminals, but the truth is that most people who use cryptocurrency are just regular people. Cryptocurrency also creates a lot of discussion because of the way it is making it possible to maintain some privacy in a world where someone is always looking over our shoulders. Be it a government, an Internet service provider, or data mongering corporations, cryptocurrencies such as Dash(earlier Darkcoin), E-Dinar Coin, Monero, Blackcoin, are constantly trying to increase the privacy of the individual.

How do you buy CryptoCurrency?

As of late, the world of cryptocurrency has emerged in full force contributing to a run to buy up hundreds of stocks in the newest digital currency market that springs up. However, even if you are familiar with this emerging market, there may be a few basic things you are unaware of which can have a detrimental effect on your trading power. Read on to learn more about how to buy cryptocurrency in a secure way.

Start by opening up an account

In digital currency, the term ‘wallet’ is used to represent your online currency account. This account will provide you the access to the crypto market from where you can buy all types of cryptocurrencies. Regardless of which wallet you choose, once you open the wallet you can then accept and disperse cryptocurrency according to your needs. Popular cryptocurrency wallets include Blockchain and Coinbase, Jaxx, and some cryptocurrencies currently have their personal wallets, like E-Dinar Coin and Monero.

Buying Cryptocurrency with and without using PayPal or Credit Card or Bank Account

Your wallet really isn’t any good until you can fill it with the digital currency. The next step is to fill your wallet up. To ensure that you aren’t dealing with any fake service provider, choose to use a cryptocurrency exchange that has a big name and excellent reputation attached to it. Some wallets like E-Dinar Coin, also link you directly to certified exchanges, where you can find their cryptocurrency and many other ones. Once you sign up for an account you will then be required to upload funds to the exchange. Generally, you can do this through PayPal, credit cards, or a bank transfer. All of these methods are considered safe if you choose the right exchange company. If you prefer not to go through financial institutions, there are other options for cryptocurrency to look to. For example, buy cryptocurrency for cash by trading with someone in real life. To find such people who trade in cryptocurrency for cash, a common place to look is at localbitcoins.com.

After you find an individual who will sell the coins to you, all you have to do is provide them with your digital wallet address and you should have the funds in your wallet within 10 minutes after the purchase. It’s that simple!

Why should I buy cryptocurrency?

There are so many reasons why you should buy cryptocurrency but most important reason is; it is easy to start and you can manage to have so many different accounts. And you can be safe from hackers, cyber criminals, and other bad influences because you don’t need to put your personal information anywhere and you won’t need a real name to buy cryptocurrency. Just with a nickname, you can buy all the coins and digital money you need or you want. Other reason you should buy this currency is because since the technology is changing and going forward, it is really important that we can go forward with it too. Millions of users already use it, and its usage is increasing every day, and as always, the first ones will get the more advantages, knowledge, and experience in this field.

It is not a safe investment, rather it should probably be seen as a new field of study with a potential to make a huge difference in the future. A lot of people believe that CryptoCurrency such as Bitcoin, E-Dinar Coin, Ethereum, Litecoin, Dash etc. can have an enormous impact on society. Not just by changing economics but also by changing bigger concepts such as law, politics, and freedom. 

What are the most popular CryptoCurrencies?

• Bitcoin: Bitcoin was started in 2009 by Satoshi Nakamoto, and this is the company who started this all. Bitcoin is the most popular Cryptocurrencies that is accepted widely, and it is also easy to get.

• Litecoin: Litecoin started in 2011 and this cryptocurrency can be mined. You can use this to transact goods and services.

• Monero: Do you care more about privacy and don’t want to be traced easily? Bitcoin is not for you. Monero usage ring signature technology that makes the transaction more secure and untraceable.

• Dash (Digital Cash): Dash Currency is another secure way to transact. It usage anonymization technology. Dash Cryptocurrency is more secure and fast. It was known as DarkCoin, but now they have changed the name to not make people assume its connection with the Dark Web

• Ripple: Ripple is actually a RTGS (Real Time Gross Settlement System), a Currency Exchange and Remittance Network. It is a bank owned cryptocurrency, meaning it's not fully decentralized, and it's also used by many banks to reduce costs. It’s not very secure if you don’t want to get traced.

• Dogecoin: This cryptocurrency is widely used to give charity or collect the donation. It was initially made as “Joke Currency”, but now has gained much popularity. 

• MaidSafeCoin: You can exchange Safecoin for providing resources, like your Storage Space, CPU, Bandwidth etc.. The Process of getting Safecoin and providing resources is called Farming.

• Ethereum: Etherreum is another popular Cryptocurrency that you can trust, but it has recently seen many ups and downs.

• E-Dinar Coin: E-Dinar Coin is another popular Cryptocurrency that started in 2016 but very popular, even thogh some that doesn't understand it think it's scam, which is not. You can trust it, but it has recently seen many ups and downs and it's currently going through downs while some people see it's down cost as an advantage for them to get loads of it with little cost.

Can I transfer cryptocurrency to a bank account or exchange for cash?

Yes, you can absolutely transfer cryptocurrency to your bank account or exchange for cash. There are many fast and safe options out there that are very good at managing both cryptocurrency and fiat currency such as USD or Yuan. They have the security of a bank, and the flexibility of a cryptocurrency exchange, so it is very easy to transfer money to your bank account.

Issues:

KYC or Know Your Customer laws and Loss of Security

In many countries, however, there are restrictions on managing other people’s money and often “know your customer” laws are in place to try to manage money laundering and other criminal activity. Therefore, you have to take into account that the benefits of anonymity that many cryptocurrencies provide are often forfeited by transferring money directly from your cryptocurrency account to your bank account.

Tax

By giving up your anonymity and disclosing your assets you might be subject to tax laws. This is, of course, different depending on what bank you use or from what country your citizenship originates but generally, it is highly recommended to be very careful about disclosing your assets without consulting a tax attorney.

Safe choices (Buy and Sell Cryptocurrency or Digital Currency for Local Money or Cash)

Coinbase.com: Coinbase is one of the largest exchange with banking services in the US that you can use to buy and sell digital currency. You can connect sell to convert in local money

Kraken.com: Kraken is another option if you want to trade digital currency

Localbitcoins.com: You can also visit LocalBitcoin’s website to buy or sell digital bitcoins for cash.

Localtrade.pro: Localtrade.pro is a new exchange which also offers e-dinar coin cloud mining and also cryptocurrencies exchanges and trades.

Kingdomexchanger.net: KingdomExchanger.net is a new Indonesian exchange that strongly believes in e-dinar coin, trading of several cryptocurrencies already occurs there.
Yobit.com: You can also visit Yobit.com’s website to buy or sell digital bitcoins for cash.

Should my company accept cryptocurrency?

Cryptocurrency is a modern payment method that has been adopted by an increasing number of companies. However, even if this number is increasing substantially, the truth is that it is rather small in comparison with the total amount of companies from the entire world. A lot of companies are still asking themselves if they should accept cryptocurrency and if you have a company and you are wondering whether to adopt cryptocurrency as a payment method, you should know that this is a complex decision that should be carefully analyzed.

Since cryptocurrency has many benefits, it seems fair to begin with all the pros. This way you will be able to learn more about this, and therefore you can take the best decision for your company. Here is the list of the most important pros that should be taken into account:

Pros or Advantages of CryptoCurrency

No Fraud

Cryptocurrency is a safer method of payment, and therefore people won’t have to worry about losing any money, or even worse, they won’t have to fear about identity theft; as a company, any payment that is made is irreversible, and therefore you do not have to worry about charge backs that you can often see from companies like PayPal, Visa or MasterCard.

Early adopters approval

It seems that cryptocurrency represents the future, and even if there is a long way until it will reach its true potential, it is on the right track; Being an early adopter as a company gives you access to customers who are also early adopters.

Global reach

You will be able to have clients from different countries, and therefore you will increase your profit. Additionally, it seems that people prefer this method because this way they do not lose money while exchanging currencies.

Low transaction fees

The fee to transfer money both between business to business as well as to and from customers are substantially cheaper than all other online payment methods.

Cons or Disadvantages of Cryptocurrency

As you know, in every situation there are always pros and cons, and therefore you should take a decision only after you have heard both the good and the bad. These are the Disadvantages or the Cons of Cryptocurrency:

Little investment to manage

Knowledge is required to implement and manage another payment system. It is very easy to start with, but it will require time to manage just like any other payment method. So you may need to hire an expert at the start, and then you can learn gradually. Or you can learn it and then start to get rid of this disadvantage.

Volatile

It is currently extremely volatile, and even though there are ways to avoid getting impacted by volatility it requires some extra management and time to learn.

Should I invest in Cryptocurrency?

Cryptocurrencies are very useful in the day to day life, as they bring a major alternative to the saturated market of real life currencies, so lots of people from all over the world embrace this new wave. However, these currencies can also be thought of as an investment, so people can get lots of money out of them in the long run if they do it properly.

Before investing in such currencies you need to figure out their value. https://www.coinmarketcap.com/ is the best source for anyone that wants to know registered cryptocurrencies and  the current price for the genuine and listed currencies or access the merchants that support cryptocurrency exchange.

When it comes to investing in crypto currencies, a good idea is to take it slow, as you don’t want to spend a lot of cash in the beginning. Instead, investigate the market prices for a few days and see how many chances of success you might have. Always remember that all cryptocurrencies don’t have an authority that controls their price, so you can easily encounter market crashes at all times. It’s important to think out of the box and invest in these currencies, of course, but you should always take the downsides into consideration before you start making any type of payment.

After that, you should consider setting up your wallet, as this is where you will store your virtual money. Check reviews and make sure that the wallet you are going to use is secure, as that is crucial. Once you set it up you can easily add funds to it without a problem. You can deposit and withdraw funds at any time from the most virtual wallets, and the payments are done very fast, which is more than refreshing for any user.

If you just want to invest in Bitcoins or Ethereum, then you can check the current price and change on https://www.coindesk.com/price/, and you can also view lots of relevant information regarding the current price and fluctuations. In addition, here you can also calculate the amount of money you spend of each Bitcoin amount, a feature that is very useful especially for those people that want to invest a lot of money in the long run.

In summary, investing in cryptocurrency is a bold move. But, one that can bring numerous profits and benefits in the long run is also risky. There are risks involved in all this, as we stated above, but in the end without risking you won’t be able to get the highest profit margin.

What are Smart Contracts?

As cryptocurrency and bitcoin has become more common and are being used more and more throughout the world, many companies are developing new technologies that can be used with currency networks like Bitcoin. How do Smart Contracts work?

So what exactly are Smart Contracts and how do they work? Think of them like a contract that is verified by computer instead of by a person or organization. A smart contract allows for information like the conditions and outcomes of legally binding agreements to be encoded into a computer program such as Bitcoin, Ethereum, and soon E-Dinar Coin. This allows for programs to get rid of the middleman that is there to ensure that those legal contracts and agreements are being fulfilled as the encoding will do that for the program. The way Smart Contracts work within Bitcoin is that they allow for the transfer of assets with an encoded signature. Many programs especially Bitcoin are finding that this helps to increase the speed and efficiency of their transactions and it also adds another layer of security and trust when it comes to the execution of the contract and agreements.

What makes them different from normal contracts?

Smart Contracts that are associated with Bitcoin are contracts that are associated with funds. What makes them different is that they are verified through the network and the program rather than by an authority. When transactions occur that use Smart Contracts the funds are paid as set forth in the agreement. For example, if you are a Bitcoin user and have a smart contract that says when transactions are made, funds will be paid to your account and then distributed as stated in the smart contract. If you have contracts that need to be paid, the money from your transaction will be distributed to that payment first and then to others as needed. Smart Contracts allow for users to set forth a contract and have it automatically fulfilled by a reliable system that can keep track of contracts. The difference is that Smart Contracts takes away the middle man, therefore also the human error.

What can Smart Contracts do?

Smart Contracts distribute and execute contracts through multiple networks, Bitcoin can be classified as one of these networks. Users of Bitcoin, Ethereum, and very soon E-Dinar Coin, can use a single smart contract to interact with other services like PayPal, Google, and E-Bay which allows for them to use it to efficiently, quickly, and safely make transactions with multiple programs. The reason Bitcoin and Smart Contracts are taking off is that it is allowing for cryptocurrency to be more efficient and it also provides an efficient legal system throughout the Bitcoin network.

Smart Contracts allow for Bitcoin users to develop contracts for the trading of major assets across the global trading exchange. This allows for contracts to be made quickly and efficiently and they are enforced through the encoding rather than by a third party. This allows for global trading and investments to be conducted quickly and safely.

For  More Details about Cryptocurrency, Proceed to Part-2

Please Leave Your Comments In The Box Below...

Rules of Prudent Investing

Constructing an Investment Plan

• Recognize that the ability, willingness and need to take risk is different for everyone. Plans fail because investors take excessive risks. The risks unexpectedly show up and the plan is abandoned. When developing a plan, investors should consider their investment horizon, stability of income, ability to tolerate losses and the required rate of return.
• Don’t invest in any security without fully understanding the nature of all of the risks. If investors cannot explain the risks to their friends, they should not invest. It’s critical to understand the nature of the risks being taken.
• A well-designed investment plan has many elements. It should integrate portfolio management with tax planning, estate planning and risk management.
• Don’t treat the highly improbable as impossible, nor the highly likely as certain. Investors assume that if their horizon is long enough, there is little or no risk. The result is they take too much risk. Stocks are risky no matter the horizon.
• Only work with advisors who will provide a fiduciary standard of care.That is the only way to ensure that the advice provided is in the investors’ best interest. There is no reason not to insist on a fiduciary standard.

Maintaining an Investment Plan

• The more complex the investment, the faster investors should run. Complex products are designed to be sold, not bought. Investors can be sure the complexity is designed to favor the issuer, not the investor. Investment firms do not simply give away higher returns.
• The only thing worse than having to pay taxes is not having to pay them. The “too-many-eggs-in-one-basket” problem often results from holding a large amount of stock with a low cost basis. Fortunes have been lost because of the refusal to pay taxes.
• The safest port in a sea of uncertainty is diversification. Portfolios should include allocations to the asset classes of large-cap and small-cap stocks, value and growth stocks, real estate, international developed markets, emerging markets, commodities and the appropriate amount of bonds.
• Owning individual stocks and sector funds is more like speculating than investing. The market compensates investors for risks that cannot be diversified away, such as the risk of investing in stocks versus bonds. Investors should not expect compensation for diversifiable risk­, such as the unique risk related to owning one stock or sector fund. Prudent investors only accept risk for which they are compensated with higher expected returns.
• Take risk with equities. The role of bonds is to provide the anchor to the portfolio, reducing overall portfolio risk to the appropriate level.

Staying in the Course

• The consequences of decisions should dominate the probability of outcomes. Investors should ask themselves if they can live with the outcome, regardless of how small of a chance there is of the outcome occurring.
• The strategy to get rich is entirely different than the strategy to stay rich. One gets rich through inheritance or by taking risk. One stays rich by minimizing risk, diversifying and not spending too much.
• The four most dangerous investment words are “This time, it’s different.” Getting caught up in the mania of the “new thing” is why the surest way to create a small fortune after starting out with a large one.
• If it sounds too good to be true, it probably is. Investment decisions should be based on the evidence from peer-reviewed academic journals.
• Keep a diary of market predictions. After a while, investors will likely conclude that they should not act on their “insights.”
• Good advice does not have to be expensive, but bad advice always costs dearly no matter how little is paid for it. Smart people do not simply choose services based on cost (the cheapest doctor or CPA). Costs matter; but it is the value added relative to the cost of the advice that ultimately matters.

            Please leave your comments in the box below...

How to Begin your Investment

FACTORS TO CONSIDER BEFORE INVESTING

Before you invest, you need to decide on the best investment option for you. To make this important decision, you should consider your goals for the investment, how long you can afford to tie down your money and how much risk you are willing to bear.

Investment goals

It is important to define your investment goals at the outset, as the choice will depend on the objective you are trying to achieve. Common investment goals are:

• Planning for your retirement
• Buying your house
• Providing for the education of your children or yourself
• Buying a new car
• Planning for a wedding or milestone birthday celebration
• Going on holiday

Investment horizon

It is essential that you have an idea of how long you can leave the money in an investment (or investment fund) account without the pressure to liquidate or cash out before realizing your objectives. Although mutual funds allow you to take money out at any time, funds that have a high degree of risk are meant for investors who have a long term horizon. This is because these funds typically invest in assets that can be volatile even though they tend to provide inflation adjusted returns over the long term. Therefore, if you invested in these assets for a short term, the risk of not getting your entire investment capital is higher compared to investing over the long-term.

Your investment horizon is fundamentally linked to your investment goals. For example if you are looking at buying a new house in a year, you may want to put your money in a investment fund that seeks to protect your capital invested and provide regular income. However, if you are a 28 year old man investing towards a higher education for your new born child, you are able to leave your money in a riskier, longer term fund in the expectation that the money will grow in line with inflation to cover the school fees when your child is ready to go for higher education.

Risk Appetite

Simply put, this means how much risk you are willing to take to get a higher level of return. The more risk you take, the higher the potential for real return, but also the higher the potential to make losses. If you are a risk taker, you may want to invest in a fund that has a higher proportion of investment in equities. However, for someone close to the age of retirement, you may want to stick to safer near cash investments.

Investment Expertise

If you are an experienced investor, you are able to invest directly in the different asset classes or pick an investment fund using your own knowledge, skill and experience. However, if you are just starting out, it may be advisable to ask professionals for advice. Funds are the easiest way for beginners, as you just need to have a basic idea of financial markets and the professionals will ensure your money is invested in the best possible way for you. Even if you have experience, sometimes it is good to talk to professionals who have first hand access to more market and information and instruments.

HOW TO INVEST   

After deciding to invest, you still have to choose how frequently you want to add to your investment and whether you want your interest paid out regularly.

Growth vs. Income

You have to decide whether you would prefer your savings to keep increasing or whether you want regular payments. If you would like to increase your savings, you are advised to reinvest your dividends into your fund. However, if you need to have a steady income for everyday spending or other purposes, you can choose to have your dividends paid out. You can also combine both options.

Lump Sum vs. Regular Savings

You have to decide on how frequently you want to invest, and the amount. If you have a lump sum to invest, you may want to make a one-off investment. However, you can also choose to invest a regular amount from your salary, or just make payments whenever you have excess cash. It is up to you to decide what you can afford and what is realistic for you, keeping in mind your financial situation and investment goals.

Hope this helps in enlightening about how to begin investment.

Like our Post, and feel free to share and comment. See you at the success end.

The 3 Types of Investments and Definitions

The word "investment" has become muddled with overuse. Referring to a stock or a bond as an investment is still in regular use, but now people make "investments" in their education, their cars and even their flat screen TVs.

In this article, we will look at the three basic types of investment as well as some of the things that are definitely not investments - no matter what the commercial says.

The Three Types of Investment

Investment, as the dictionary defines it, is something that is purchased with money that is expected to produce income or profit. Investments can be broken into three basic groups: ownership, lending and cash equivalents.

Ownership Investments

Ownership investments are what comes to mind for most people when the word "investment" is batted around. Ownership investments are the most volatile and profitable class of investment. The following are examples of ownership investments:

Stocks

Stocks are literally certificates that say you own a portion of a company. More broadly speaking, all traded securities, from futures to currency swaps, are ownership investments, even though all you may own is a contract. When you buy one of these investments, you have a right to a portion of a company's value or a right to carry out a certain action (as in a futures contract).

Your expectation of profit is realized (or not) by how the market values the asset you own the rights to. If you own shares in Sony and Sony posts a record profit, other investors are going to want Sony shares too. Their demand for shares drives up the price, increasing your profit if you choose to sell the shares.

Business

The money put into starting and running a business is an investment. Entrepreneurship is one of the hardest investments to make because it requires more than just money. Consequently, it is also an ownership investment with extremely large potential returns. By creating a product or service and selling it to people who want it, entrepreneurs can make huge personal fortunes. Bill Gates, founder of Microsoft and one of the world's richest men, is a prime example.

Real Estate

Houses, apartments or other dwellings that you buy to rent out or repair and resell are investments. The house you live in, however, is a different matter because it is filling a basic need. The house you live in fills your need for shelter and, although it may appreciate over time, it shouldn't be purchased with an expectation of profit. The mortgage meltdown of 2008 and the underwater mortgages it produced are a good illustration of the dangers in considering your primary residence an investment.

Precious Objects

Gold, Da Vinci paintings and a signed LeBron James jersey can all be considered an ownership investment - provided that these are objects that are bought with the intention of reselling them for a profit. Precious metals and collectibles are not necessarily a good investment for a number of reasons, but they can be classified as an investment nonetheless. Like a house, they have a risk of physical depreciation (damage) and require upkeep and storage costs that cut into eventual profits.

Lending Investments

Lending investments allow you to be the bank. They tend to be lower risk than ownership investments and return less as a result. A bond issued by a company will pay a set amount over a certain period, while during the same period the stock of a company can double or triple in value, paying far more than a bond - or it can lose heavily and go bankrupt, in which case bond holders usually still get their money and the stockholder often gets nothing.

Your Savings Account

Even if you have nothing but a regular savings account, you can call yourself an investor. You are essentially lending money to the bank, which it will dole out in the form of loans. The return is pitiful, but the risk is also next to nil because of the Federal Deposit Insurance Corporation (FDIC).

Bonds

Bond is a catchall category for a wide variety of investments from Treasuries and international debt issues to corporate junk bonds and credit default swaps (CDS). The risks and returns vary widely between the different types of bonds, but overall, lending investments pose a lower risk and provide a lower return than ownership investments.

Cash Equivalents

These are investments that are "as good as cash," which means they're easy to convert back into cash.

Money Market Funds

With money market funds, the return is very small, 1% to 2%, and the risks are also small. Although money market funds have "broken the buck" in recent memory, it is rare enough to be considered a black swan event. Money market funds are also more liquid than other investments, meaning you can write checks out of money market accounts just as you would with a checking account.

Close, but Not Quite

Your education is called an investment and many times, it does help you earn a higher income. A case could be made for you "selling" your education like a small business service in return for income like an ownership investment.

The reason it's not technically an investment is a practical one. For the sake of clarity, we need to avoid the ad absurdity of having everything be classified as an investment. We'd be "investing" every time we bought an item that could potentially make us more productive, such as investing in a stress ball to squeeze or a cup of coffee to wake you up. It is the attempt to stretch the meaning of investment to purchases, rather than education, which has obscured the meaning.

Not Investments

Consumer purchases - beds, cars, TVs and anything that naturally depreciates with use and time - are not investments. As an example, you don't invest in a good night's sleep by buying a foam pillow. Unless you're very famous, and even then, it's a stretch, since you can't reasonably expect someone to pay more for your pillow than the initial purchase cost. Don't take it personally, but there's very little demand in the second-hand pillow market.

The Bottom Line

There are three types of investments: ownership, lending and cash equivalents. There is no fourth category of consumer purchases.

Admittedly, it's a clever piece of advertising that removes some of the guilt from impulse purchasing; you're not spending money frivolously, you're investing! The decisive test is whether there is a potential to turn a profit. The important word is "potential" because not every legitimate investment makes money.

Making money through investing requires researching and evaluating different investments, not simply knowing what is and is not an investment. That said, being able to see the difference between an investment and a purchase is an essential first step.

Feel free to post your coments below...

What Is Investing?

Investing: The act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit.

Legendary investor Warren Buffett defines investing as “… the process of laying out money now to receive more money in the future.” The goal of investing is to put your money to work in one or more types of investment vehicles in the hopes of growing your money over time.

What is investing?

Investing is really about “working smarter and not harder.” Most of us work hard at our jobs, whether for a company or our own business. We often work long hours, which requires sacrifice and adds stress. Taking some of our hard-earned money and investing for our future needs is a way to make the most of what we earn.

Investing is also about making priorities for your money. Spending is easy and gives instant gratification—whether the splurge is on a new outfit, a vacation to some exotic spot or dinner in a fancy restaurant. All of these are wonderful and make life more enjoyable. But investing requires prioritizing our financial futures over our present desires.

Investing is a way to set aside money while you are busy with life and have that money work for you so that you can fully reap the rewards of your labor in the future. Investing is a means to a happier ending.

Investing Vehicles

There are many different ways you can go about investing, including putting money into stocks, bonds, mutual funds, ETFs, real estate (and other alternative investment vehicles), or even starting your own business.

Every investment vehicle has its positives and negatives, which we'll discuss in a later section of this tutorial. Understanding how different types of investment vehicles work is critical to your success. For example, what does a mutual fund invest in? Who is managing the fund? What are the fees and expenses? Are there any costs or penalties for accessing your money? These are all questions that should be answered before making an investment. While it is true there are no guarantees of making money, some work on your part can increase your odds of being a successful investor. Analysis, research and even just reading up on investing can all help.

Feel free to post your comment below