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Make Money Online - What next?

ArticleID 10  
Writer Isaac Thuku
Category Personal Article

Am assuming now after following the tips, tools, links and free articles on tuwaze.com, you have managed to make some dollars here and there. If not get in touch with me and I will help you get started on a one to one basis. All youneed is an internet connection and some time on your hands.

Now that you've minted some money online, my next question is, what are you going to do with it? Buy some online merchadise, pay your bills, save it in your bank account, donate it to a good cause, invest it or plain burn it. Whichever you choose, its still the right choice after all its your money. However, indulge me a little bit and let me show you a different way. I suggest you invest it, why? Because if you invest it, you can still do all the above with your money and some, if not more, of it will still be around to spend when you retire.

First things first, we need to ask and answer each of the following questions. That way we can understand, What is investing? Who is an investor? What is an investment? What do I need to be an investor? Am I an investor right now? What should I expect when I invest?

- What is an investment? This is the act of putting money into something, in this case an asset, with the expectation that I will gain something in return. - Who is an investor? Anyone who takes the risk to investment their money in assets with the sole objective that in the future it will pay back more than what they bought it for. To be an investor you need the financial resources and knowledge on how, where and when to invest.

- What is an asset? An asset is anything that is considered to have economic value. In other words you can exchange it for cash. Simple examples include your car, house, computer, a website e.t.c. Cash is also an asset.

- What is a liability? In the context of business a liability is any obligation owed to someone else. Simple example include a loan, unpaid bills etc.

- What is capital? These are the resources required in a business to generate revenue or wealth. Simple exaples include money, tools and equipment, premises etc

- What is a share? A share is a single unit of capital. Assuming you have company whose capital is worth $1,000 which in this case is 100% of the capital. A share in that company is worth $1,000/100 = $10.

- Who is a share holder? An individual or legal entity that owns shares in a company. If you own 50% of the company, your shareholding is (50/100 x 1000) x $10 = $500

- What is a dividend? This is the portion of a company's profits that is paid to the shareholders. Assuming Company A made $100,000 in profits and its is decided that each share holder will recieve $1 per share then if you own 50% of the company you will get $50.

- What is interest? This is the compensation paid for using someone else' assets or financial resources. Interest rate is usually calculated in percentage.

The one rule of investing you need to know is that there is always a risk involved, you could make or lose money when investing. However, an investor's job is to mitigate the risk involved and ensure that the chances of making a loss are reduced and those of making money increased.

What are the major investment vehicles available to the layman investor?

- Stocks - This is where you buy a part of an existing company, private of public. The reutrn in this class of investment is dividends and capital growth when the stock price goes up or theere is a share split or a bonus.

- Collective Investment Funds - In funds, many investors pool their money together and the fund manager uses those funds to invest in one or many types of investments like stocks and real estate. The biggest benefit in this grroup is that one gets to invest and benefit from assets you would not afford if you went into it as an individual. real estate

- Business - Business is the activity of making money or any activity carried out with the main goal being a profit. It could be the sale of tangible goods or provision of services. In this case you invest your money in the company that sells the goods and services and in return you get dividends as a shareholder.

Are you an Investor, a Business Owner, an Employee or Self Employed? An investor earns income from his investments, business owner from his businesses, employee a salary working for the business owner, self employed from selling services to the business owner and investor.

Send me what you think in the form below and a reason why you think you fit into that group.

These four individuals ways in which income is earned are part of the Cashflow Quadrant as explained by author/investor Robert Kiyosaki of Rich Dad Poor Dad fame.

More invetor self help material available at the tuwaze.com Duka (Duka means 'a shop' in Swahili)

Starting next week I'll start diarising the days of an investor, I suggest you do the same and then after several months we'll analyse progress made together and compare notes together with you. Watch this space!!!!

Article by Thuku Isaac
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