What’s the point in investing?

Investing is the process of providing money now, in return for some future profit.

The most common reason for investing in the western world is to save for your retirement.

And the industry is huge!

Superannuation in Australia has a record $2.3 trillion dollars invested as at March 2017.

This money is the combined savings of every employee or retiree that has ever contributed to a retirement fund in some way.

Different types of return from investments

An investor makes a return on their investment in two possible ways.

The first way is through income.

Products such as cash and bonds offer interest income as an incentive for investors to loan or deposit money.

These returns are either fixed or variable.

Generally the higher the interest rate, the riskier the loan. Though most cash and fixed interest products are relatively safe assets.

That is because your capital, the amount you originally invest, is usually returned in full.

The second way of making a return is through capital gains.

Shares and property are the two main asset classes that offer this possibility.

A capital gain is simply the value of your original investment going up over time.

But be aware that the possibility of losing money is also present in such investments at a comparatively high degree.

Some assets offer both type of return.

For example, a property combines income in the form of rent along with a possibility of capital growth over time.

Similarly, a lot of stocks pay part of their profits back to shareholders in the form of dividends.

Individual investors choose different investments based on different goals and opinions.

You should always make sure you invest according to your individual preferences. And make an effort to understand the risks and returns of your investment portfolio.

Our editors and analysts here at Port Phillip Publishing often write about investing and investments. But you won’t find the same tired analysis here as in the mainstream press.

We pride ourselves on our independence and on never following the crowd. You can find all our articles on investing on this page.

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Bitcoin Works!
The crypto market is no stranger to big numbers. Filecoin raised $187 million in one hour in its ICO. Ark — a ‘blockchain platform’ — went up 1,000 times. Nano, whatever that is, rose 3,747 times, transforming an initial investment of $500 into $1.8 million. And there may be more big gains coming in the crypto space. Very, very few people own cryptos. They represent a tiny percentage of money transactions.
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Wesfarmers: The Sound of Churning Capital
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Should Investors Trust Facebook?
While we technically have the whole world at our finger tips, our world can become one-dimensional and limited. This is something really risky for investors. Hearing one view, confirming what you already think, can be dangerous for your investments. You are not seeing new ideas or challenging your own.
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Perfect timing is impossible. No one knows when the inherent instability in an overpriced market will be exposed. The higher a market rises — on artificial earnings and higher PE multiples — the more dangerous it becomes. While mathematics and history warn you to exit a market well before it reaches the danger zone, rarely do people apply logic at the time of peak greed. It’s all about emotion.
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Sometimes when you buy into a stock, it just doesn’t behave the way you expected it to do. But rather than admitting to yourself that you made a mistake, you look for all sorts of reasons to keep holding it. Have you noticed this in your own trading and investing? So how do you avoid buying into bad stocks?
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The Value of Reading and Thinking
The two big trends — over-valued markets and the shifting tectonic plates in the economy — are on a collision course. Being in a position to capitalise on the opportunities that are coming, is going to be one of those ‘getting it right’ moments in life…the ones that people think happen by luck. But, it wasn’t luck…it was due to taking the time to read and think.
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A Window of Opportunity
The International Monetary Fund increased its world growth forecast for 2018 and 2019. They expect the world to grow by 3.9% in 2018 and 2019. That is a 0.2% increase from the previous forecast.  But don’t get too comfortable with this synchronised world notion…it may not last long.
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Is This the Future of Money?
In a crisis, cash is king. But with physical cash disappearing, we are losing control over our own money. Cryptos, being outside of the system, could give you another option to access cash to buy necessities or move money in a time of crisis.
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Lessons to Learn from Failure
The most difficult part of being a financial planner was trying to persuade people against running with the herd. Past performance is the story of the past, not the future. Yet this logic was often dismissed, as investors chased yesterday’s winners (which in reality, were tomorrow’s losers).