Saturday, January 28, 2006

I'm Young - How Do I Get Rich? - Part II

Lets talk about Speculation and wealth.

In the first part we discovered how wealth can be built over time with compound interest. Here we will look at becoming rich by speculation - which should be combined with part I.

Don't forget to consider starting your own business.

Being young you have time to study markets and learn to ride asset class waves. The freedom of only investing when there is a positive climate can yield large rewards.

You have a huge advantage over professional investors.

Professionals get their MBA and dive right into a specialized financial niche. As a private investor you will not be better at analyzing bonds than a bonds pro, or better at trading wheat than a wheat specialist.

You can be good at guessing what's next, and learning how to profit in the almost now best sector to invest.

If you think metals will take off as China's growth accelerates, you can research iron, gold, and uranium. The bond and wheat trader will still be great at their niche, but that's it.

When in a decade or two you decide everyone hates stocks and bonds, you can switch back and buy some financial or paper assets..

If the professional bond trader is still in business, he'll still be great at bonds.

You can be a generalist, you can switch asset classes at will, you can succeed. You can also have compound interest working on your behalf.

Youth is a great advantage.


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