How would you like to find an investment that will consistently outperform every other investment you make? There is such an investment, but it’s not anything you’d expect.
In fact, it’s not real estate. It’s not the stock market. It’s not options. It’s not treasuries. And it’s not commodities.
The investment is giving to your church and other charities. If you don’t believe this investment will always outperform every other investment you make, let me share a story from Dr. Joe Morecraft, a pastor friend of mine.
Joe was on the board of directors for a fairly large company. At the annual board meeting, one of the board members, an elderly man who had amassed a sizable fortune, made a stunning announcement. He told the board that he had far more money than he could ever use and no heirs to give it to, so he was going to give away his entire fortune over the next year.
The rest of the board was stunned!
Well, one year later, the board came together again. But this time, there was a noticeable buzz in the air. Everyone wanted to know if the man was able to give away all those millions of dollars.
When the man entered, the room fell silent. Then came the announcement. A very red-faced board member had to tell all those influential people that he had failed in his task. But what he said was even more stunning than his original announcement.
He told the board that through the course of the last year, he gave away millions upon millions of dollars. He established a pace that, he thought, would enable him to quickly get rid of everything he owned.
Then something happened that he didn’t expect. He started making more money than he had ever made previously in his life. All of his investments were moving up faster than they ever had. The man had to tell the board that he was, in fact, far wealthier after that one year than he was when he made the original announcement. But what he said next was one of those lessons we all need to learn.
The last thing he said was, “What I learned this year is that I can’t out-give God.” As hard as he tried, he couldn’t get rid of his money faster than God was blessing him.
So if you’re looking for a way to get the best return on your money, give it away. The return won’t always be monetary. And there are times when you won’t see the rewards this side of heaven. But the reward will always be far greater than the investment.
By: Steve Kroening
Wednesday, April 18, 2007
Tuesday, April 17, 2007
Investment
Investment or investing[1] is a term with several closely-related meanings in business management, finance and economics, related to saving or deferring consumption. An asset is usually purchased, or equivalently a deposit is made in a bank, in hopes of getting a future return or interest from it. Literally, the word means the "action of putting something in to somewhere else" (perhaps originally related to a person's garment or 'vestment').
Contents
[hide]
* 1 Types of investment
o 1.1 Business Management
o 1.2 Economics
o 1.3 Finance
o 1.4 Personal finance
o 1.5 Real estate
+ 1.5.1 Residential Real Estate
+ 1.5.2 Commercial Real Estate
* 2 See also
* 3 Notes
* 4 External links
[edit] Types of investment
The term "investment" is used differently in economics and in finance. Economists refer to a real investment (such as a machine or a house), while financial economists refer to a financial asset, such as money that is put into a bank or the market, which may then be used to buy a real asset.
[edit] Business Management
The investment decision (also known as capital budgeting) is one of the fundamental decisions of business management: managers determine the assets that the business enterprise obtains. These assets may be physical (such as buildings or machinery), intangible (such as patents, software, goodwill), or financial (see below). The manager must assess whether the net present value of the investment to the enterprise is positive; the net present value is calculated using the enterprise's marginal cost of capital.
[edit] Economics
In economics, investment is the production per unit time of goods which are not consumed but are to be used for future production. Examples include tangibles (such as building a railroad or factory) and intangibles (such as a year of schooling or on-the-job training). In measures of national income and output, gross investment I is also a component of Gross domestic product (GDP), given in the formula GDP = C + I + G + NX. I is divided into non-residential investment (such as factories) and residential investment (new houses). "Net" investment deducts depreciation from gross investment. It is the value of the net increase in the capital stock per year.
Investment, as production over a period of time ("per year"), is not capital. The time dimension of investment makes it a flow. By contrast, capital is a stock, that is, an accumulation measurable at a point in time (say December 31st).
Investment is often modelled as a function of income and interest rates, given by the relation I = f(Y, r). An increase in income encourages higher investment, whereas a higher interest rate may discourage investment as it becomes more costly to borrow money. Even if a firm chooses to use its own funds in an investment, the interest rate represents an opportunity cost of investing those funds rather than loaning them out for interest.
[edit] Finance
In finance, investment is buying securities or other monetary or paper (financial) assets in the money markets or capital markets, or in fairly liquid real assets, such as gold, real estate, or collectibles. Valuation is the method for assessing whether a potential investment is worth its price.
Types of financial investments include shares, other equity investment, and bonds (including bonds denominated in foreign currencies). These financial assets are then expected to provide income or positive future cash flows, and may increase or decrease in value giving the investor capital gains or losses.
Trades in contingent claims or derivative securities do not necessarily have future positive expected cash flows, and so are not considered assets, or strictly speaking, securities or investments. Nevertheless, since their cash flows are closely related to (or derived from) those of specific securities, they are often studied as or treated as investments.
Investments are often made indirectly through intermediaries, such as banks, mutual funds, pension funds, insurance companies, collective investment schemes, and investment clubs. Though their legal and procedural details differ, an intermediary generally makes an investment using money from many individuals, each of whom receives a claim on the intermediary.
[edit] Personal finance
Within personal finance, money used to purchase shares, put in a collective investment scheme or used to buy any asset where there is an element of capital risk is deemed an investment. Saving within personal finance refers to money put aside, normally on a regular basis. This distinction is important, as investment risk can cause a capital loss when an investment is realized, unlike saving(s) where the more limited risk is cash devaluing due to inflation.
In many instances the terms saving and investment are used interchangeably, which confuses this distinction. For example many deposit accounts are labeled as investment accounts by banks for marketing purposes. Whether an asset is a saving(s) or an investment depends on where the money is invested: if it is cash then it is savings, if its value can fluctuate then it is investment.
[edit] Real estate
In real estate, investment is money used to purchase property for the sole purpose of holding or leasing for income and where there is an element of capital risk. Unlike other economic or financial investment, real estate is purchased. The seller is also called a Vendor and normally the purchaser is called a Buyer.
[edit] Residential Real Estate
The most common form of real estate investment as it includes the property purchased as peoples houses. In many cases the Buyer does not have the full purchase price for a property and must engage a lender such as a Bank, Finance company or Private Lender. Different countries have their individual normal lending levels, but usually they will fall into the range of 70-90% of the purchase price. Against other types of real estate, residential real estate is the least risky.
[edit] Commercial Real Estate
Commercial real estate is the owning of a building small or large where a company rents from you so that it can conduct its business. Due to the higher risk of Commercial real estate, lending rates of banks and other lenders are lower and often fall in the range of 50-70%.
[edit] See also
* Appreciation
* Capital accumulation
* Capital (economics)
* Diversifying investment
* Divestment
* Financial economics
* Foreign direct investment
* Gold as an investment
* Investor profile
* Investor relations
* Investment-specific technological progress
* Kelly Criterion For Stock Market
* Market trends
* Megaproject
* Over-investing
* Philatelic investment
* Regulation Fair Disclosure
* Rate of return
* Saving
* Silver as an investment
* Speculation
* Stock trader
* Value investing
* List of marketing topics
* List of management topics
* List of economics topics
* List of accounting topics
* List of finance topics
* List of economists
* List of financial services companies (by country)
Contents
[hide]
* 1 Types of investment
o 1.1 Business Management
o 1.2 Economics
o 1.3 Finance
o 1.4 Personal finance
o 1.5 Real estate
+ 1.5.1 Residential Real Estate
+ 1.5.2 Commercial Real Estate
* 2 See also
* 3 Notes
* 4 External links
[edit] Types of investment
The term "investment" is used differently in economics and in finance. Economists refer to a real investment (such as a machine or a house), while financial economists refer to a financial asset, such as money that is put into a bank or the market, which may then be used to buy a real asset.
[edit] Business Management
The investment decision (also known as capital budgeting) is one of the fundamental decisions of business management: managers determine the assets that the business enterprise obtains. These assets may be physical (such as buildings or machinery), intangible (such as patents, software, goodwill), or financial (see below). The manager must assess whether the net present value of the investment to the enterprise is positive; the net present value is calculated using the enterprise's marginal cost of capital.
[edit] Economics
In economics, investment is the production per unit time of goods which are not consumed but are to be used for future production. Examples include tangibles (such as building a railroad or factory) and intangibles (such as a year of schooling or on-the-job training). In measures of national income and output, gross investment I is also a component of Gross domestic product (GDP), given in the formula GDP = C + I + G + NX. I is divided into non-residential investment (such as factories) and residential investment (new houses). "Net" investment deducts depreciation from gross investment. It is the value of the net increase in the capital stock per year.
Investment, as production over a period of time ("per year"), is not capital. The time dimension of investment makes it a flow. By contrast, capital is a stock, that is, an accumulation measurable at a point in time (say December 31st).
Investment is often modelled as a function of income and interest rates, given by the relation I = f(Y, r). An increase in income encourages higher investment, whereas a higher interest rate may discourage investment as it becomes more costly to borrow money. Even if a firm chooses to use its own funds in an investment, the interest rate represents an opportunity cost of investing those funds rather than loaning them out for interest.
[edit] Finance
In finance, investment is buying securities or other monetary or paper (financial) assets in the money markets or capital markets, or in fairly liquid real assets, such as gold, real estate, or collectibles. Valuation is the method for assessing whether a potential investment is worth its price.
Types of financial investments include shares, other equity investment, and bonds (including bonds denominated in foreign currencies). These financial assets are then expected to provide income or positive future cash flows, and may increase or decrease in value giving the investor capital gains or losses.
Trades in contingent claims or derivative securities do not necessarily have future positive expected cash flows, and so are not considered assets, or strictly speaking, securities or investments. Nevertheless, since their cash flows are closely related to (or derived from) those of specific securities, they are often studied as or treated as investments.
Investments are often made indirectly through intermediaries, such as banks, mutual funds, pension funds, insurance companies, collective investment schemes, and investment clubs. Though their legal and procedural details differ, an intermediary generally makes an investment using money from many individuals, each of whom receives a claim on the intermediary.
[edit] Personal finance
Within personal finance, money used to purchase shares, put in a collective investment scheme or used to buy any asset where there is an element of capital risk is deemed an investment. Saving within personal finance refers to money put aside, normally on a regular basis. This distinction is important, as investment risk can cause a capital loss when an investment is realized, unlike saving(s) where the more limited risk is cash devaluing due to inflation.
In many instances the terms saving and investment are used interchangeably, which confuses this distinction. For example many deposit accounts are labeled as investment accounts by banks for marketing purposes. Whether an asset is a saving(s) or an investment depends on where the money is invested: if it is cash then it is savings, if its value can fluctuate then it is investment.
[edit] Real estate
In real estate, investment is money used to purchase property for the sole purpose of holding or leasing for income and where there is an element of capital risk. Unlike other economic or financial investment, real estate is purchased. The seller is also called a Vendor and normally the purchaser is called a Buyer.
[edit] Residential Real Estate
The most common form of real estate investment as it includes the property purchased as peoples houses. In many cases the Buyer does not have the full purchase price for a property and must engage a lender such as a Bank, Finance company or Private Lender. Different countries have their individual normal lending levels, but usually they will fall into the range of 70-90% of the purchase price. Against other types of real estate, residential real estate is the least risky.
[edit] Commercial Real Estate
Commercial real estate is the owning of a building small or large where a company rents from you so that it can conduct its business. Due to the higher risk of Commercial real estate, lending rates of banks and other lenders are lower and often fall in the range of 50-70%.
[edit] See also
* Appreciation
* Capital accumulation
* Capital (economics)
* Diversifying investment
* Divestment
* Financial economics
* Foreign direct investment
* Gold as an investment
* Investor profile
* Investor relations
* Investment-specific technological progress
* Kelly Criterion For Stock Market
* Market trends
* Megaproject
* Over-investing
* Philatelic investment
* Regulation Fair Disclosure
* Rate of return
* Saving
* Silver as an investment
* Speculation
* Stock trader
* Value investing
* List of marketing topics
* List of management topics
* List of economics topics
* List of accounting topics
* List of finance topics
* List of economists
* List of financial services companies (by country)
Sunday, April 15, 2007
Trading Psychology Management
What trader has not heard the phrase trading psychology? What trader has not viewed, or been told that their trading problems are the result of trading psychology?
What trader does not need trading psychology management, if they are to become a profitable trader?
What an interesting combination of words: trading + psychology. When considered separately by definition, and especially by a 'non-trader', these words would appear to have nothing to do with each other. Trading is the buying and selling of an underlying contract through the execution and management of a trading method; psychology is the study of the brain and behavior, which is done in an attempt to help people understand why they feel and think the way they do, and/or help them make changes to their resulting behavior from these feelings and thoughts.
This list includes typically discussed trading psychology issues, but what do any of these have to do with trading by definition?
* You don't take a trade means you have a fear of losing * You over trade means that you have a fear of missing something * You don't take a stop means that you won't take responsibility * You hesitate taking a trade means you have a fear of being wrong * You trade with money that you can't afford to lose - TILT
The list comprises psychology issues, which then lead to an emotional response which occurs during trading; these issues do not have anything to do with trading method. These are fears and emotions, which would become a problem to the individual any time that they were 'tested' in a performance related activity.
Trading psychology management will involve the realization that any of the emotional problems that you have previously encountered in other stress related circumstances, will absolutely be an issue when trading, but that this is related to the 'emotional baggage' that you bring into trading, this is not isolated to trading.
Traders spend so much time searching for that perfect trading system, but they do so little to prepare mentally for trading - WHY is that the case? Two primary reasons for this would be awareness and avoidance.
Trading Psychology Management Awareness
Many people coming into trading have been very successful in past endeavors. If these experiences didn't involve dealing with stress in a way that the resulting emotions had to be controlled in order to succeed, they now have no reason to know that ultimately trading psychology management will be the determinant in their ability to now be a success at trading. This was my experience when I came into trading, a high performing scholar-athlete through school, and then successful at starting and running two profitable businesses; I just assumed that I would learn how to trade and be very good at it.
It is interesting just how unaware of the realities of emotional impact I actually was. I had only gotten involved in trading because I sold my businesses after my wife's mother and my father had passed away in a four month period, and I felt the 'need' to 'get away' and do something different. Coupled with these personal emotions was the 'influence' I was receiving from the person that I was learning from - paper trading was for 'pussies', just take your trades and manage them.
Absolutely, I was an emotional accident waiting to happen, and the wreck did occur. If you don't know me, or haven't heard the rest of my 'learning to trade' story before, ask me some time about how I had an office lease terminated because of my continual screaming-cussing outbursts - NOT one of the highlights of my life.
Trading Psychology Management Avoidance
People that have an avoidance issue with emotions, have either encountered them before in previous activities, or they are quickly impacted by them soon after they begin trading. However, they view psychology and emotion as personal weaknesses, therefore they won't accept that they exist; through avoidance, this group then believes that they have no need for trading psychology management.
Avoidance is not a solution for anything. It does not matter what the problems are, or in what context that they are encountered, avoiding your problems will NOT make them go away. Ultimately, they are only going to continue to get worse, and IF an eventual solution is ever forthcoming, it will be so with more difficulty and pain than would have been necessary if it was dealt with 'from the beginning'.
Obviously, everyone would love to go through life, day-to-day and task-to-task, without being confronted with fears and emotions that undermine the ability to perform; it is enough of a challenge to learn the necessary skills without also having to deal with this 'extra crap'. BUT this is not personal weakness to avoid. The person who can accept the problems honestly, instead of with avoidance and denial, is the person with strength AND the person who has the ability to find solutions for these additional challenges.
Actually, it doesn't really matter how you 'feel' about emotions and what they represent. The reality is that if you are going to trade, you are going to be effected by 'your' psychology - this is the only guarantee from trading that anyone will ever receive; this must be understood and accepted from the beginning. Then approach trading with a dual concentration on both method and psychology, developing a trading psychology management plan that is intended to gain control over the emotions brought on by trading, in order to allow focus on trading method evaluation and trading performance.
by Barry Lutz
What trader does not need trading psychology management, if they are to become a profitable trader?
What an interesting combination of words: trading + psychology. When considered separately by definition, and especially by a 'non-trader', these words would appear to have nothing to do with each other. Trading is the buying and selling of an underlying contract through the execution and management of a trading method; psychology is the study of the brain and behavior, which is done in an attempt to help people understand why they feel and think the way they do, and/or help them make changes to their resulting behavior from these feelings and thoughts.
This list includes typically discussed trading psychology issues, but what do any of these have to do with trading by definition?
* You don't take a trade means you have a fear of losing * You over trade means that you have a fear of missing something * You don't take a stop means that you won't take responsibility * You hesitate taking a trade means you have a fear of being wrong * You trade with money that you can't afford to lose - TILT
The list comprises psychology issues, which then lead to an emotional response which occurs during trading; these issues do not have anything to do with trading method. These are fears and emotions, which would become a problem to the individual any time that they were 'tested' in a performance related activity.
Trading psychology management will involve the realization that any of the emotional problems that you have previously encountered in other stress related circumstances, will absolutely be an issue when trading, but that this is related to the 'emotional baggage' that you bring into trading, this is not isolated to trading.
Traders spend so much time searching for that perfect trading system, but they do so little to prepare mentally for trading - WHY is that the case? Two primary reasons for this would be awareness and avoidance.
Trading Psychology Management Awareness
Many people coming into trading have been very successful in past endeavors. If these experiences didn't involve dealing with stress in a way that the resulting emotions had to be controlled in order to succeed, they now have no reason to know that ultimately trading psychology management will be the determinant in their ability to now be a success at trading. This was my experience when I came into trading, a high performing scholar-athlete through school, and then successful at starting and running two profitable businesses; I just assumed that I would learn how to trade and be very good at it.
It is interesting just how unaware of the realities of emotional impact I actually was. I had only gotten involved in trading because I sold my businesses after my wife's mother and my father had passed away in a four month period, and I felt the 'need' to 'get away' and do something different. Coupled with these personal emotions was the 'influence' I was receiving from the person that I was learning from - paper trading was for 'pussies', just take your trades and manage them.
Absolutely, I was an emotional accident waiting to happen, and the wreck did occur. If you don't know me, or haven't heard the rest of my 'learning to trade' story before, ask me some time about how I had an office lease terminated because of my continual screaming-cussing outbursts - NOT one of the highlights of my life.
Trading Psychology Management Avoidance
People that have an avoidance issue with emotions, have either encountered them before in previous activities, or they are quickly impacted by them soon after they begin trading. However, they view psychology and emotion as personal weaknesses, therefore they won't accept that they exist; through avoidance, this group then believes that they have no need for trading psychology management.
Avoidance is not a solution for anything. It does not matter what the problems are, or in what context that they are encountered, avoiding your problems will NOT make them go away. Ultimately, they are only going to continue to get worse, and IF an eventual solution is ever forthcoming, it will be so with more difficulty and pain than would have been necessary if it was dealt with 'from the beginning'.
Obviously, everyone would love to go through life, day-to-day and task-to-task, without being confronted with fears and emotions that undermine the ability to perform; it is enough of a challenge to learn the necessary skills without also having to deal with this 'extra crap'. BUT this is not personal weakness to avoid. The person who can accept the problems honestly, instead of with avoidance and denial, is the person with strength AND the person who has the ability to find solutions for these additional challenges.
Actually, it doesn't really matter how you 'feel' about emotions and what they represent. The reality is that if you are going to trade, you are going to be effected by 'your' psychology - this is the only guarantee from trading that anyone will ever receive; this must be understood and accepted from the beginning. Then approach trading with a dual concentration on both method and psychology, developing a trading psychology management plan that is intended to gain control over the emotions brought on by trading, in order to allow focus on trading method evaluation and trading performance.
by Barry Lutz
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