What Is an Investment?

One of the reasons many people fail, even very woefully, in the game of investing is that they play it without understanding the rules that regulate it. It is an obvious truth that you cannot win a game if you violate its rules. However, you must know the rules before you will be able to avoid violating them. Another reason people fail in investing is that they play the game without understanding what it is all about. This is why it is important to unmask the meaning of the term, ‘investment’. What is an investment? An investment is an income-generating valuable. It is very important that you take note of every word in the definition because they are important in understanding the real meaning of investment.

From the definition above, there are two key features of an investment. Every possession, belonging or property (of yours) must satisfy both conditions before it can qualify to become (or be called) an investment. Otherwise, it will be something other than an investment. The first feature of an investment is that it is a valuable – something that is very useful or important. Hence, any possession, belonging or property (of yours) that has no value is not, and cannot be, an investment. By the standard of this definition, a worthless, useless or insignificant possession, belonging or property is not an investment. Every investment has value that can be quantified monetarily. In other words, every investment has a monetary worth.

The second feature of an investment is that, in addition to being a valuable, it must be income-generating. This means that it must be able to make money for the owner, or at least, help the owner in the money-making process. Every investment has wealth-creating capacity, obligation, responsibility and function. This is an inalienable feature of an investment. Any possession, belonging or property that cannot generate income for the owner, or at least help the owner in generating income, is not, and cannot be, an investment, irrespective of how valuable or precious it may be. In addition, any belonging that cannot play any of these financial roles is not an investment, irrespective of how expensive or costly it may be.

There is another feature of an investment that is very closely related to the second feature described above which you should be very mindful of. This will also help you realise if a valuable is an investment or not. An investment that does not generate money in the strict sense, or help in generating income, saves money. Such an investment saves the owner from some expenses he would have been making in its absence, though it may lack the capacity to attract some money to the pocket of the investor. By so doing, the investment generates money for the owner, though not in the strict sense. In other words, the investment still performs a wealth-creating function for the owner/investor.

As a rule, every valuable, in addition to being something that is very useful and important, must have the capacity to generate income for the owner, or save money for him, before it can qualify to be called an investment. It is very important to emphasize the second feature of an investment (i.e. an investment as being income-generating). The reason for this claim is that most people consider only the first feature in their judgments on what constitutes an investment. They understand an investment simply as a valuable, even if the valuable is income-devouring. Such a misconception usually has serious long-term financial consequences. Such people often make costly financial mistakes that cost them fortunes in life.

Perhaps, one of the causes of this misconception is that it is acceptable in the academic world. In financial studies in conventional educational institutions and academic publications, investments – otherwise called assets – refer to valuables or properties. This is why business organisations regard all their valuables and properties as their assets, even if they do not generate any income for them. This notion of investment is unacceptable among financially literate people because it is not only incorrect, but also misleading and deceptive. This is why some organisations ignorantly consider their liabilities as their assets. This is also why some people also consider their liabilities as their assets/investments.

It is a pity that many people, especially financially ignorant people, consider valuables that consume their incomes, but do not generate any income for them, as investments. Such people record their income-consuming valuables on the list of their investments. People who do so are financial illiterates. This is why they have no future in their finances. What financially literate people describe as income-consuming valuables are considered as investments by financial illiterates. This shows a difference in perception, reasoning and mindset between financially literate people and financially illiterate and ignorant people. This is why financially literate people have future in their finances while financial illiterates do not.

From the definition above, the first thing you should consider in investing is, “How valuable is what you want to acquire with your money as an investment?” The higher the value, all things being equal, the better the investment (though the higher the cost of the acquisition will likely be). The second factor is, “How much can it generate for you?” If it is a valuable but non income-generating, then it is not (and cannot be) an investment, needless to say that it cannot be income-generating if it is not a valuable. Hence, if you cannot answer both questions in the affirmative, then what you are doing cannot be investing and what you are acquiring cannot be an investment. At best, you may be acquiring a liability.

Get to Know More Home Based Business Ideas

The trend today is home based jobs with more and more people leaving their work cubicles at office only to stay home and work. This method of working seems to be picking up speed over the past few years with more and more moms turning down their office jobs to stay home and take care of the kids while earning a handsome income from doing jobs at home. It is considered the best home based business ideas. It is very hard to find stay-at-home moms taking care of the home and the kids alone, she is bound to be a work-from-home as well, adding an income to the family’s budget.Though presently more and more people are turning to the internet to earn their extra dollars there still are many who earn a living doing other jobs as well. However the internet has many home based business ideas that one can choose from according to the particular skill that you possess.Network marketing is fast developing with online trading sites like eBay, Amazon and the like. These sites are always in need of sales assistants to sell the products of many manufacturers and dealers. The commission that is offered for selling their products is very high and one can consider this as one of the home based business ideas to earn money.Besides this affiliate marketing, article writing, blogging, travel writing etc. are well known methods that most people adopt to make steady and lucrative incomes that would settle their bills at home, or at least allow for a luxurious vacation each year.Online tutoring is an effective way of earning money and spreading knowledge. Teachers are always in demand throughout the world. It would be one of the best home based business ideas to do online tutoring of children in reputed schools and colleges, while sitting at home. Though the wages you get would seem high the proprietors would feel relaxed at not having to spend thousands of dollars employing a regular tutor to visit the campus everyday and teach the children.Counseling and consulting services are also much in demand. Many students are very anxious to soar high in their careers but they have no idea how to go about with their plans. By setting up a counseling center you can assist them with their plans and help them take the right decision based on their skills and qualification, in return for a commission that you can charge.Medical transcription and legal or other transcription jobs are flooding the internet searching for reliable transcriptionists to do transcribe their interviews, conference chats, speeches etc. Medical transcription is a continuous flow of work for the right person who can take care of the transcribing job efficiently.Photography, web designing and many such home based business ideas can bring in lucrative income while at the same time keeping you occupied and happy doing something that you love. Make use of the services of the internet to find more home based business ideas that would suit your skill and knowledge.

How to Promote Your Home Based Businesses Without Spending a Penny

The Internet has brought a revolution in the world of home based businesses providing various ways to make extra money from home. The best thing about a home business is that you can work as many hours as you want and whenever you want to. There is no additional commuting time spent and all the money that you make, goes straight into your pocket and not to a company that would take its chunk out first! Luckily, there are various ways that you can use to promote your home based business without having to pay a penny! Below are the Top 3 ways:One of the best ways to promote your home based business is to convince the other business owners to refer new clients to you. While this may sound difficult, it is often more easily achieved than you may think. Typically, there are many business owners who would like to work on joint venture basis. You should try to connect with several such business owners, by visiting social media sites like Twitter, Face book and even some of the forums regularly. After developing a healthy relationship with some of the goal oriented people, you can ask them, if they would like to promote your services to their clients, by telling them that you would also refer them to your clients who might be interested in taking benefit of their services. This method of promotion is not instant, but can give you great reward, if you work on with the right business owners.  A second way to promote your business, will depend on how you want to run your business. You might want to start off your home based business by having clients who are your friends, family members and neighbors. It is important that you treat them politely and give them prompt service, when you are working with them. These three characteristics will help you convince them to spread the news about your business to their friends and family. This entire process is called word of mouth marketing. The best part about it is that it costs nothing to you!  A third way to promote your business is through solicitation. While this may seem like a rather hard way to promote your business, finding the right people and providing a valuable service every time, will bring you new clients. When you are making new contacts, you need to make sure you are polite, prompt and professional. So that you will be in position to convince them that the service provided through your home based business will assist them to have best success online, which may turn them into your lifetime prospects.  Whether you choose to have other business owners refer you new clients or try to get clients through any other way, see that you run your business in a positive manner. The customer is always right, no matter what they want to do. Being polite, prompt, and professional will make a positive impression on their mind. This impression may just give you additional clients with no work other than being a good business owner required. There are plenty of ways to market your business that do not require money, you just need to find them!