Personal Investing

Chiao Liu's personal investment notes:

The goal of this page is to recite information that I learned from Investing for Dummies. Different investment tools will be discussed as well as advantages and disadvantages of the tools.

The Stock Market:
Investment in the stock market is purchasing a piece of a publically traded company. Essentially stocks are ownerships in a company. There are different multiple ways to invest one's funds through the stock market and some can be very risky. Historically, the US market returns have beaten the inflation rate, therefore increasing the attraction in this investment tool.

Real Estate:
Investing in real estates is another way to grow one's funds. Returns in this field are dependent on market condition in terms of jobs, population growth, and demand. One must be clearly understand the trends in the market condition to be successful in this field.

Cash Equivalents:
Money market or mutual funds are ultra safe ways to grow your funds. Typically financial investment firms will collect large sums of money from various savings and invest the funds in various securities. The upside is that there is virtually no work for the investor as all the work is done by a professional investor. The return and risk will vary depending on the aggressiveness of the investment portfolio. This is probably the most popular investment tool today.

Bonds:
Buying bonds are ways for an individual to lend money to a large business or the government. In most cases, the risks are fairly low and returns are typically low. Depending on the Bond issuers, however, some times returns are higher and of course with higher risks.

Small Businesses:
Purchasing or investing small businesses are great tools to grow your financial numbers. Returns can be exceptional dependent on the market and the personal gratification is also very high dependent on the depth of involvement. There is typically lots of work involved and owning a small business can cause one's emotion and finances to behave like a roller coaster ride.

Precious Metals:
Purchase metals such as gold, silver or platinum can be means to an investment. Historically, precious metals have low volatility estimates with steady and more importantly consistent returns. The downfall is the low dividends that yield from this investment median and the returns barely exceed inflation.

Collectibles:
One may collect antiques, arts, sport memorabilia, etc. Typically, there is a huge markup on the items compared to the 'true' value of the items themselves. There are some costs associated with managing collectibles. Appraisals cost are generally needed to determine the market value of the collectible and depending on the type of collectible, forgery may be a huge issue. Essentially, using collectibles as a tool to invest is probably not a great choice, risks are low to medium and the returns are typically very low.

Source:
Tyson, Eric. Investing for Dummies. Indianapolis, Indiana: Wiley, Inc., 2003.

Disclaimer!! The above information is simply a summary of investment information from Investing for Dummies by Eric Tyson. This is not by any shape or form, my personal recommendation or advisement in terms of personal financing and investments…Chiao Liu