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July 4, 2018

Many do not understand investing

Financial Freedom (An Ongoing Series)

Last time we spoke of the financial periods of your life. Each of those periods calls for different types of investments.

Many do not understand investing. This was evident when I used 12% examples (for example purposes), and a few people commented that the rate of return I was using was not realistic as if that made the whole exercise worthless.

Fact is, there are many different types of investments and as Clauson said in the Richest Man in Babylon and the "Seven Cures of a Lean Purse," Know about that in which you invest.

Characteristics of an Investment

Each investment has an objective:

Create an income or cash flow

Grow...appreciation

Both - Create income and grow.

Investment is subject to one or more of the 6 stated risks in a previous post.

The higher the risk or combination of risks, the higher the possibility for higher return or yield.

An individuals tolerance for risk and suitability for a certain type of investment will depend upon their financial period at that time.

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