3 Kinds of Investors

An investor is someone who puts his money into something with the aim of deriving a benefit or profit from it. When it comes to investment there are three kinds of investors:

1. Foolish investors

2. Average Investors and

3. Wise investors.

The foolish investors are people who invest all their money in their wants and desires. They are out for the latest shoes, designer this and that even when they have little money. They hardly know what it means to delay gratification. All they know is that they must have what they desire and crave for NOW, so they simply invest in that. Of course such things bring no returns. They principally purchase liabilities rather than assets. It may be better to pause here and define liabilities and assets because many are of the impression that assets are items we spend money to buy while liabilities are debts or items that are not useful to you. This may not be entirely true.

Assets are simply items we possess that bring in more money for us while liabilities are items that take our money from us. For instance, if I own a car that I use personally it is a liability because it takes away money from me in terms of maintenance to keep it in top form to have it serve me optimally. But if I use this same car as an airport taxi it becomes an asset because it brings in more money on a daily basis. When the foolish investors attempt to venture into investing in what could possibly bring returns they do so in things they hardly understand. Consequently they end up losing more money

The Average investors invest in their needs and basic necessities of life. They ensure that they have food to eat, send their children to school, pay medicals etc. They buy luxuries first when ever they come into big cash. They want to please and compete with their neighbours and friends. Imagine someone who earns for the first time in his professional working career $25,430 after working for 20 years and the first thing he does is buy a brand new car for about $23,500. What makes this situation even more ridiculous is that the guy already has a fairly good car, is in debt, lives in a rented apartment and is unmarried! Are you in this category?

The wise investors ensure that their money go work for them. They invest heavily, consistently and with focus in investments that they clearly understand and bring high returns. When it comes to monetary issues sending their money to work for them comes first. The delay gratification and buy luxuries last after first investing. In fact they use part of the money they have made from their investments to finally purchase the luxuries they desire.

Let’s TAKE ACTION right now. Which category do you belong to? In the last one month what have you found yourself doing with money? Take a look at all the things you bought. How many are assets and how many are liabilities? Ask yourself did you save, spend or invest money?

Learn to save and invest money today so you can be a wise investor. This is another secret to growing wealth.

Source by Christine Vidal-Wachuku