How Does Investment Work? Could Someone Please Explain?

[chandru009 0]

This might sound silly to a lot of people, but i dont understand how you can buy shares and then make money from it. the same with investing in property? whats the point of that? the way i see it, you take out a home loan, buy a house with it, lease the house to tenants and then the mortgage gets paid off, then, you sell the house and yes, you make a profit from that, but wouldn't it take like, 20 - 30 years for the house to get paid off through leasing it? Am i missing something?

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Seo Agency | Seo Newcastle

[keving77 0]

This might sound silly to a lot of people, but i dont understand how you can buy shares and then make money from it. the same with investing in property? whats the point of that? the way i see it, you take out a home loan, buy a house with it, lease the house to tenants and then the mortgage gets paid off, then, you sell the house and yes, you make a profit from that, but wouldn't it take like, 20 - 30 years for the house to get paid off through leasing it? Am i missing something?

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Seo Agency | Seo Newcastle

Its difficult to spell out everything here. But yes, u can make money from shares, in fact everyone can. Of course to make money from shares CONSISTENTLY is another story altogether.

Anyway, if the sound of rental yield sounds good to u, then there are options for people to invest in divident yielding plays, where the price movement is more stable with decent dividend payout ranging from 5-10% per annum.

Example, ST Engr, Singpost, Starhub etc. Not a lot of returns, but at least better than fixed deposit. And it is not as capital intensive as buying property. Majority of the investors/punters/speculators, whatever u call them, are usually in for capital appreciation in price. U be amazed by the returns, but of course higher gain = higher risk too.

Investing in shares and property can be considered asset building, provided done in the correct manner. Shares allow the smaller player to join the fray. If u have a few $k onwards, u can start investing in shares already, unlike property which require a lump sum + years of commitment. So it really depends on your risk appetite, capital amount, and investment horizon to see what is actually more suitable for u.

[bepgof 20]

This might sound silly to a lot of people, but i dont understand how you can buy shares and then make money from it. the same with investing in property? whats the point of that? the way i see it, you take out a home loan, buy a house with it, lease the house to tenants and then the mortgage gets paid off, then, you sell the house and yes, you make a profit from that, but wouldn't it take like, 20 - 30 years for the house to get paid off through leasing it? Am i missing something?

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Seo Agency | Seo Newcastle

You've missed so many things.

From shares(gains):

1. Capital gain

2. Dividend gain

From shares(risks)

1. Cash flow stuck.

2. Interest oppunity cost

3. Depreciation of stock (company lousy performance)

4. Stock delisted from trading house.

5. Buy high sell low

From Property(gains)

1. Capaital gain or appreciation over time.

2. Rental yield

From Property (risks)

1. Cash flow stuck.

2. Interest opportunity cost

3. Depreciation (land title) and building structures

4. Buy high sell low

5. Variable holding costs

Edited October 29, 2010 by bepgof

[chang2 0]

This might sound silly to a lot of people, but i dont understand how you can buy shares and then make money from it. the same with investing in property? whats the point of that? the way i see it, you take out a home loan, buy a house with it, lease the house to tenants and then the mortgage gets paid off, then, you sell the house and yes, you make a profit from that, but wouldn't it take like, 20 - 30 years for the house to get paid off through leasing it? Am i missing something?

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Seo Agency | Seo Newcastle

Invest in shares = u realise profit/loses in short time ( usually within 2 years)

Invest in property = long term profit (rental will cover loan while property appeciates at 4-8% per annum = better than bank interest)

Invest with fund managers = giving money to a gambler n ask him to gamble without supervision n he will let u know a few years later if u made any winnings ( he still charge u commission even if he has lost all your money)