- About RFS
- Medical Students
- Residents & Fellows
- Service Lines
- Join RFS
- Contact Us
We all want to live a comfortable life. While what you consider “comfortable” may differ based on your personal circumstances and your outlook on life, there is a good chance that whatever it may be has a good deal to do with how much money you have. Financial experts are always telling you to start investing early. But what is investing and how do you go about doing it? Let’s address the basics.
What is Investing?
According to Dictionary.com, to Invest is to “put (money) to use, by purchase or expenditure, in something offering potential profitable returns, as interest, income, or appreciation in value.” In short, investing means using your money for things that may make you more money.
What can you invest in?
Anything! Education, house, cars, jewelry, art, pretty much anything you think that may be worth more as time goes on can be an investment. But usually when you hear the word “investment” being tossed around by CNBC and Wall Street types, they are talking about financial investments such as stocks and bonds. So let’s examine investments.
All investments fall into 2 categories: equity or debt.
All other investments – mutual funds, ETFs, currency, commodities, futures, options, etc. are all variations of either debt or equity. We will leave these alone for now.
When should I start investing?
AS EARLY AS POSSIBLE! See my post Why You Should Start Saving – Yesterday!
How do I invest?
Now that’s the 6 million dollar question! Just like what you consider “comfortable” may differ based on your specific circumstance and your outlook on life, how you should invest will vary by individual as well. The key is to know thyself. If you are one to have large mood swings – you know who you are – then biotech startups may not be the best investment for you. If there is one rule to increase your chance of generating a good return on your investments – that is to have a diversified portfolio. It is the same reason your health insurance company makes a profit – by distributing the risk of rare diseases (read expensive) among the majority of healthy paying clients.
How do I guarantee a great return?
The answer is there is NO guarantee. Even great investments in the past can turn out to be big losers in the future. To invest is to accept risk, a risk-free investment does not exist (although US Treasure Bonds come pretty close). If anyone guarantees you a great return, say 20% a year, they are either lying or doing something illegal. Think Bernard Madoff.
Questions or comments? Feel free to reach out to me at Future Proof MD.
73 total views, 3 views today