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GAMES OF CHANCE
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CARD GAMES
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The most popular, 100% legal way to gamble your money is by investing in
the stock market. The laws of probability say most investors won't beat the
market in the long run. However, most investors will try anyway.
It may not be as addictive as smoking cigarettes or shooting craps, but
trading stocks online has turned some investors into bona fide Web junkies.
Lured by the casino-like excitement of the stock market and the flashy,
fast-moving action on their computer screens, some Internet investors
acknowledge they're hooked -- and their inability to stop trading has cost
them plenty of money.
The best advice we can offer is to treat online investing in the same way as
gambling. Do not risk what you can not afford to lose. Educate yourself
about investing in the same way you learned how to play casino games.
You need to begin by performing an assessment of your personal finances. If
you wish to invest in stocks, bonds, mutual funds or even real estate, you
need capital to invest. a basic requirement is to construct a net worth
statement which will list your assets (cash, private property, savings, etc)
as well as your debts (loans, credit cards, mortgage, etc). Look closely at
your debt position and determine if you can afford to invest yet. List the
debt and the interest rates of each debt position. It is much better to pay
off high interest debt (12% or higher) that it is to invest the same money
and earn 10% per year.
Next, determine the level of risk you want to take with your investments as
well as the percentage of return (earnings or interest) you would be
satisfied with. This is very critical to making smart investment decisions.
Are you a high or low risk taker ? Would you be satisfied with 8% per year
or do you want 25% or more? This is a personal decision that no one can make
for you. If you want high risk, consider equities (stocks), and if you want
minimal risk, look at government backed Treasury Bills.
How much can you afford to invest? A regular savings and investment plan is
the key to your success. Get in the habit of saving a certain percentage of
every paycheck, and write out an investment check just like you would in
paying a bill. Consider this amount in your monthly budget. Learn to live
within your means. Some of the wealthiest men in the world learned this
lesson early in life. They are happy to drive a car that is ten years old
and live in a house that is modest, yet fully paid for. They live well below
their means and would readily admit it was one of the keys to acquiring
wealth and being able to enjoy other things in life (travel, giving to
others, etc.).
