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[E148]Effects Of Marijuana Long Term

by Micheal James, Mic

Long term investing postulates a certain amount of patience. It does not involve running after the hot picks and making quick bucks, or, eating hot cake and burning the mouth. At the same time, it does not mean that you should not search for high value stocks which can be hot stocks as well. Long term investing mostly implies walking like the fabled tortoise that defeated the hare in the long run.

Time, patience and diligence are stock investors? best friends. Long term investing results in compounding effect in increasing the wealth. Compounding is a mathematical process where the interest gets added to the principal amount which in turn earns more interest. Over the time the initial investment multiplies phenomenally.

The compounding effect can be illustrated by an example. Let us assume there are four persons each aged 25, 35, 45 and 55 respectively. Each one of them invests $1,000 at 8% return per year till the age of 65 when he will get back his accumulated money. Let us assume:

The first investor starts at the age of 25 and earns over $292,500

The second investor starts at the age of 35 and earns $125,000

The third investor starts at the age of 45 and makes $49,400

The fourth investor starts at the age of 55 and makes just $ 15,350.

The results are surprising. The income made by each earlier investor speaks for itself. It is quite clear from the above data that the youngest investor make the most of his investment. The earnings of the second starter are much less than half of the first one. The earnings of the third investor are a little more than one third of the second and they are three times higher than the fourth investor.

There can be a different perspective of looking at the investment scenario if you have a long term plan. Suppose each one of the above investors plans to make
$37,500 by the age of 65, how much will he have to invest per year? The rate of return remains 8% ignoring the taxation and inflation.

The first investor who starts at 25 has to invest a measly amount of around $106 per month. The second starting at 35 has to invest $250 per month. The fourth has to invest a huge $2035+ per month. The conclusion is evident. The earlier you start, the less you have to invest every month to achieve your goal.

The above example is just hypothetical. Many unprecedented problems can crop up in real life situations. The interest rates may vary because of a number of factors. There may be times during the decades when your money may earn more and at other times it may make less.

You may also be forced to make corrections for the mistakes that you may have inadvertently made in your calculations. You may have thought that a particular stock may soar like an eagle, but it turned out to be slower than a turkey. You may still look for better alternatives even if those you chose were doing pretty well.

The way to avoid suffering losses and making corrections is to diversify your portfolio. Moreover, since your portfolio is diversified and you have invested only a small part of your investment in each stock, your loss will accrue only on a small part of your investment and not on the whole. If your investment in one stock suffers loss, you may make it up through your investment in another stock. This facility to make changes can be easily available only to the early investor.

What will happen if the investor starts investing at the age of 55 and somehow his plan goes awry because of the downturn of the market? The results can be disastrous. There is not much room for correction within a period of only ten years before you retire at 65.

The truth about stock market is that it may go up and down without any warning. Those who invest early have a better chance of riding over the bad times and making the best of the periods when the market goes upbeat.

It must, however, be noted that if you have invested in a market leader with a high value stock, you should not fall in love with it. If its price starts falling, you must become extra watchful about the cause of its fall. If you think that the fall will continue, you must sell it off without yielding to your emotions of love, greed or fear.

Star Trek has had multiple incarnations. The original series, the next generation, a series in deep space and one called Enterprise. There have been movies and next generation events. Now the franchise goes back to the beginning and we see the original cast in a new light (and much younger). The second movie with this cast has already been given the green light to move forward. This was announced even before the first movie hit theaters.

Is there a lesson in all of this for business? Yes.

No business should ever remain static. There should always be a push to move forward. At some point this requires some reimagination. This whole concept means the business needs to reinvent who it is, rediscover why it does what it does and find the relevancy in reaching out to a new group of potential buyers.

Television does this all the time. They are intent on reaching out to younger and upwardly mobile viewers. This is why you don't see Gunsmoke or Mork and Mindy on network television today. At some point a series simply fades in response to the most recent demographic change.

It may be lamentable for some, but it does provide unique challenges and opportunity to reach out to new buyers. If you can't accomplish this goal you will ultimately find your business slowly dying. Everything that looks new and shiny today will seem old and outdated in just a few months. Where once you could go a few years without altering anything today we find businesses in a constant mode of reinvention and continual tweaking.

This may sound as if the business doesn't know what it wants to do. Actually this concept is needed to help discover who your customers are. Any good business owner knows that business is driven by consumers and if you can't identify your target and learn to reach them then your business is marginalized. When that happens the business can begin to fade very quickly.

This does not mean you need to abandon existing customers or somehow insult them if they don't fit your demographic target, but it does mean that you work at constantly expanding the envelope of acceptance in your customer base.

There have been some great companies that have come and gone because they didn't see the need to redirect their attention to their target demographic.

If you're wondering how that works let me explain. If a business has a target of 18-30 year old women and they open their online business to appeal to that age group they have started well. If, however, over a period of time they continue to appeal to the exact crowd they started with then suddenly they are appealing to 23-35 year olds or 35-47.

There is comfort in the niche of an accepting consumer base. This idea might work, in fact it might even be a good business model for certain products, but the truth is at some point you will no longer have customers. This is why most businesses refocus their attention on a younger demographic. It is the only way to ensure the potential of consistent sales and a promising future.

Article Source : Investing and Trading

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Both Micheal James & Scott Lindsay are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Micheal James has sinced written about articles on various topics from Investing and Trading, Fitness and Stock. SogoTrade stock broker:Trading Packages at SogoTrade: