Passive Income for the Brave: Investing 101

Investing is Not Just for Econ Nerds

Investing is exciting and fun stuff. All you non-finance people, who just threw up in your mouths a little, that’s okay. Hear me out here. The whole scenario sounds intimidating, but it’s not. You find a company, like ScotTrade, or something like that, that handles investments, do a little internet research to find out what companies you want to invest in, and voila, you are on your way. Make sure you follow the buying and selling rules below, and you’ll be set. You can make a nice, tidy passive income while the stocks rise and fall.

The Buy In

You don’t have to be an Econ genius to understand basic market tendencies. It pretty much sums up like this: you, yourself, are a consumer. That makes you part of the market trends, you make little financial votes every day for companies that you believe in, just by walking in and buying something, you’re making a vote that those particular companies should go on living, and perhaps even grow. Take that principle and apply it across the spectrum of the world of businesses. If you’re a consumer, you have a little insight into what will make the market tick. If you stay up-to-date with new things, then when something uncannily wondrous crosses your path, you’ll notice it. And those are the things that are tomorrow’s best and brightest big ideas.

Take, for example, frozen yogurt. A humble food, but oh-so-tasty, it has had a hay-day with the market of late. Self-serve frozen yogurt places are popping up everywhere, and they’re cramming out the old fad: smoothies. Read this as an opportunity to garner a little extra cash for whatever suits your fancy.  Invest in companies you love anyway, then take the money that sat there and earned itself for you, and spend it on products at that company. Brilliant.

Your opinions are part of the market, so amplify them. If you like something, chances are that others do, too. Watch social media posts to see what people are talking about. It may sound over-simple, and maybe it is, but it works. Find things that seem to be beginning to trend (beginning being a key word) and invest when the ideas are just launching. With any luck, you’ll catch something on a big rise and win. It’s like playing the lottery, but with a treasure map of your own behavior and patterns to guide you to the winning ticket.

The only problem is that investing is a little addicting. Okay, a lot addicting. So, you’re gonna want to budget for it, make room for a little investing each month, and watch the money grow. I have gone from wanting one pair of shoes to wanting a shoe closet to hold my shoes. Keep in mind that the market is unpredictable. Investing doesn’t make you money on your time frame, so you can’t save up for things specifically. The market controls when you buy, sell, and put the money to use. It’s a blast to have money that works for you, and it generates an income for you while you work your 9-5.

Buy Low, Sell High

Sounds like some REALLY obvious advice, but it’s not so straightforward. When you get into the market, you will inevitably find yourself doing what most people do. You will also find out what makes the stock market a successful place for just a few people. This happens because the majority respond to inner psychology rather than reading the market and letting it tell them when to buy and sell.

When stocks rise, there’s this psychological tendency we have to think it’s going to go higher, so some people buy things because they’re “trending” and others hold onto investments until they actually can’t go any higher, and they start to sink. When they sink, we think they’re gonna drop further, so we sell. That would be called buying high and selling low, which is also known as losing money. Don’t do this. Think counter-intuitively. If it seems wrong, chances are, it could be very right in the stock market game. A few people get it right. They sell when their brains say to wait, and they buy when things don’t look good.

No one who’s walking around loaded with cash from the boom of Apple computers bought the initial investment when the company was already enormous. The people who made it big off of the rapid growth of a company found something that they thought could be big one day, and they took a chance on it. So, look for niche businesses that are heading in the right direction and invest. Start small. Learn how the market works with a little money at a time, and when you get good at it, you’ll start making a bigger and bigger passive income as you go.

Yes, investing in the global economy is a risky and somewhat depressing venture, but if you get out there and try your hand at it, you might find that this is the kind of passive income you’ve dreamt of making.

What are your thoughts? Share your investing stories with us!

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