The nature of investment

#the nature of investment

Investment, most of the definitions on the market are similar, that is, to pay a certain amount of funds or resources to obtain income in a certain period of time in the future.

This actually implies that investment requires cost. This cost includes not only the initial funds and resources, but also the time and energy spent.

The so-called “cognition realization” is actually based on the dedication of time and energy, because there are no people who are born with extremely high cognition, but because of the difference in environment, talent, and luck, there are indeed people who can only pay A relatively small amount of time and effort to achieve a high level of cognition.

Thinking a little more deeply, investment is a kind of exchange, where cost A is exchanged for benefit B. Different people value A and B differently. Based on this idea, in this world, you cannot avoid investment. All behaviors are actually investing, such as:

When you work, you exchange your time and ability for spiritual pleasures such as money or a sense of accomplishment.
When you travel, have dinner, eat, drink and have fun, you exchange money, time and energy to enjoy life.
When you read and study, you exchange time and energy for knowledge, and you think knowledge is more helpful to your life.
You speculated in stocks and used 1 million to get 2 million, but you also paid time, energy, psychological pressure, and the opportunity cost of this 1 million that cannot be used for other places (such as eating, drinking, and entertainment), so it is also an exchange.

So investment is that you exchange A for B, and you think B is more worthwhile.

#expectations and risks

Investment is an activity that revolves around costs and benefits. Naturally, two points are inseparable here:

Expectations, what is the return you expect to get.
Risk, how much you can afford to lose.

Generally speaking, expectations and risks are of course directly proportional, but in fact there is no completely risk-free investment. Even if you deposit your money in the bank to earn interest, you still face:

The country prints a lot of money, and the interest income cannot keep up with the depreciation of the currency.
Countries decline and banks fail.

There are no specific standards for investment decisions in daily life, such as how much money should be spent to buy peace of mind, whether it is worth booking a good hotel, or whether you should marry this person, and these vary from person to person.

However, for traditional industrial or financial asset investment, more professional knowledge is required, so it is indispensable to spend time learning. At the same time, one should set a reasonable expectation and risk based on one’s own psychological quality and ability assessment.

#before investing

Before investing, you must clarify what kind of investor you are and think about your own personality. After high returns, you need to take enough risks, rich knowledge and time. Is your psychological quality enough? Are you someone who loves to learn? Are you willing to spend your time and energy on enjoying life to study?

If you really don’t like learning very much or don’t have time, you can make some low-risk and low-return investments. This is also a choice. It’s not a bad idea to enjoy life and spend time with your family without taking high-risk psychological pressure. good thing.

Leave a Reply

Your email address will not be published. Required fields are marked *