Investing: Making your money work for you

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There are two ways to earn an income. One, you can work and be paid money for it, which is what the rest of the world does, and two, you can make money by investing it in something, which is what the rich do.

In between those, there are lots of ways to make your money work for you. Here are some:

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 • Invest in mutual funds.
 
This is good for people who do not like the risks of investing in the stock market or foreign exchange. Investing in mutual funds is safer than investing in the stock market, as with mutual funds, your investments are diversified.



• Invest in the stock market.

Potentially, there is a lot of money to be made in the stock market. However, it is also a place where you can lose a lot of money due to making the wrong investments. It is also possible to diversify your investments in the stock market, but you will need to invest more money to do.

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 • Invest in real estate.

Investing in real estate is potentially very rewarding. However, a lot of people are put off by this because of the amount of money it requires.

• Invest in the foreign exchange.

Due to the advent of the Internet, foreign exchange trading became easier to do. The amount you earn depends on the strength of a particular currency, say the Euro versus the US dollar.

So how about the money you have in your savings account? You actually lose money instead of earn money because it earns interest at rates that do not keep up with inflation.

The Esplanade Capital website is a great resource for you to start having your money work for you.

Getting to know the stock market: What are fundamentals?

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Many have been found reluctant to invest in the stock market because of stories they heard from people about other people losing millions overnight on bad investments. Although it is true that there are a lot of people who lose millions there, knowing the fundamentals of a stock can be the difference between winning or losing in the stock market.

Fundamentals or fundamental analysis of a stock means getting down to the basics. Unlike technical analysis, which only focuses on a company’s stock price history and its fluctuations, fundamental analysis involves analyzing a company and identifying the true value of its stocks based on that analysis. Stock analysts in investment management firms, like Esplanade Capital, LLC and Legg Mason, Inc., look at the financial aspects of a company, which include revenues, expenses, assets, and liabilities.

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 These financial aspects can tell stock analysts answers to these questions:

• Is the company profiting? 
• Can it pay its debts? 
• Is it posting revenue growth? 
• Is it in a good position to outmaneuver its competitors?

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If the answer to all those questions is yes, it means that that company’s stock is a good investment, even when its stock price is down. In the long run, the stocks of a company with good fundamentals will always reflect the fundamentals.

Basically, it’s all just common sense. If a company is doing well, earning well, and have been in business for decades, why would people be scared of buying its shares?

Interested in starting an investment? This website has information that can help you out.