Tuesday, November 5, 2013

How To Get Rich - Know When Not to Invest

Do you think it is always a good time to make an investment ?

Do you think there are good times and better times to invest ?

Truth is, there are times when you should not invest !

Financial Brainwashing Explained

The financial world is full of advise. Financial planners, brokers, insurance salesmen, etc. They will all tell you the same thing. They all tell you that you should have all of your money invested all of the time to get the most out of your investments.

Truth is, they are all wrong. There are times when all investments good and bad are just too expensive to ensure you a good profit. Then why do these so called experts tell you to keep buying ? Sadly, because it is better for their business. A continuous supply of new money is what makes them prosper. Higher commissions on higher volumes of assets under management.

The average investor simply does not know any better. They believe what the so called experts are telling them. Ask yourself this about your financial adviser. Why is he or she still working if they are so good at investing ? Should they not be on a beach somewhere making gobs of money with their own investments ?

When Cash Is King

Your money is only good for two things in life. The first is that it can be used to make you more money. The second is that it can buy the things you want to enrich your life. Beyond that it has no use.

Cash has the most value to you when all ways of making more money are too expensive to make sense. Do you not like to see a good sale on a product or service you need or want ? Do you not sometimes hold on to your money and wait for a good sale to come along ? The exact same rules should apply to your investments.

The experienced investors are slowly building their cash reserves as the markets climb in value. They either sell part of their investments for a profit or they hold onto their dividends to invest later when there is a sale.They will never be making new investments when everything is too expensive to ensure them a good profit. They simply wait for a better time to invest.

What To Do

You must learn to recognize when it is a good time to invest and when it is a good time not to invest. An old rule of thumb for me is "When in Doubt, Wait It Out " ! You will never lose money by staying on the sideline, but you can lose money if you buy at the wrong time.

There is nothing wrong with building up your cash reserve when all other investments look too expensive. Know what you want to make from an investment before you buy. As investment values rise, the yield will fall as a percentage of the investments' value. If the yield becomes too low, then your investment is becoming too expensive to continue buying. This is when cash is king.

You must realize that all advisers in the financial field are in business to make money just like any other business. Some are better than others, but they all must make money to survive. Don't let them persuade you that it is always a good time to invest.

As always, I welcome your comments and suggestions for future topics.


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