Pretend that someone came up to you and offered you $100 that you could spend on anything, no strings attached.
What would you spend it on? If you are like most people, you would spend it on an item you've had your eye on, or maybe on a nice meal for your family.
The money would then be gone, and you would be back to where you were before that person approached you.
Now, let's look at that same situation from an investor's point of view.
Say that same person came up to an investor, and offered the same amount of money, still with no strings attached.
The investor would look at that money, and then decide to put it to work.
There are plenty of ways to do this, and the investor knows that it's important to choose one that will give him or her the most reasonable chance of getting back more than $100.
Investing in the the forex and stock market are two classic examples of this.
But that doesn't mean that the $100 should be put into investing - it means that it should be put into something that has the best potential to increase that money.
This could mean investing in the stock market, but it could also mean investing in your home or even paying off an outstanding loan.
Let's compare those three ideas.
If you put the $100 into the stock market, you could reasonably expect to get a return on your money, assuming that you did your homework and chose the right stock.
A good guess for the rate of return would be 11%, which was the average rate of return for a stock from 2009 to 2010.
That would mean a return of $11.
You could also put that $100 toward updating your bathroom, which is one of the two ways that experts guarantee will increase your home's value.
A bathroom remodel can give you as much as an 80% return on your investment, which would be $80 out of your $100 that you would get back.
And if you were to pay back an outstanding $100 loan that you had been making $10 payments on a month, you would be getting a 100% return on your investment, one less $10 bill at a time.
Going back to our examples from the beginning, that person giving you money is you.
When you get a bonus as work, earn some overtime, or get a gift of cash, you are giving yourself that money to spend as you would like.
So consider thinking like an investor by putting that money to work.
What would you spend it on? If you are like most people, you would spend it on an item you've had your eye on, or maybe on a nice meal for your family.
The money would then be gone, and you would be back to where you were before that person approached you.
Now, let's look at that same situation from an investor's point of view.
Say that same person came up to an investor, and offered the same amount of money, still with no strings attached.
The investor would look at that money, and then decide to put it to work.
There are plenty of ways to do this, and the investor knows that it's important to choose one that will give him or her the most reasonable chance of getting back more than $100.
Investing in the the forex and stock market are two classic examples of this.
But that doesn't mean that the $100 should be put into investing - it means that it should be put into something that has the best potential to increase that money.
This could mean investing in the stock market, but it could also mean investing in your home or even paying off an outstanding loan.
Let's compare those three ideas.
If you put the $100 into the stock market, you could reasonably expect to get a return on your money, assuming that you did your homework and chose the right stock.
A good guess for the rate of return would be 11%, which was the average rate of return for a stock from 2009 to 2010.
That would mean a return of $11.
You could also put that $100 toward updating your bathroom, which is one of the two ways that experts guarantee will increase your home's value.
A bathroom remodel can give you as much as an 80% return on your investment, which would be $80 out of your $100 that you would get back.
And if you were to pay back an outstanding $100 loan that you had been making $10 payments on a month, you would be getting a 100% return on your investment, one less $10 bill at a time.
Going back to our examples from the beginning, that person giving you money is you.
When you get a bonus as work, earn some overtime, or get a gift of cash, you are giving yourself that money to spend as you would like.
So consider thinking like an investor by putting that money to work.
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