Wednesday, March 26, 2008

Appetite For Destruction Or Just Risk?

As an investor it is very important to realize where you are in your life, and what exactly your investment goals are. Generally, if you are a younger investor you can tend to take on more risk or more "speculative plays" if you will. Now, this doesn't mean you should go out and buy all risky stocks, you always need those stable dividend paying stocks.

In fact, one of the ways the rich get richer is that they just purchase a few high paying, stable, dividend paying stocks. Then take those cash dividends that you receive quarterly, and invest them into more speculative stocks. Once you make a bit of mad money on your speculative stocks, cash out some, or all of them, and re-invest into your high paying dividend stocks or other safer investments. Rinse and repeat...

Of course, this does take a lot of money/stock to generate much in the form of cash dividends, but it is none the less very possible. I am sure there are many rich investors out there taking advantage of it all the time. As a small investor though, you might just not be aware of this trick of the trade.

Now, if you are an older individual it is more important to have steady stocks that pay large dividends as you can use this as a source income. Not only this, but you should have a fair amount of bonds, mutual funds and even cds as a source of income. The most boring investments after all, are the safest, and that it what you need going into retirement.

So, before you invest make sure you know what your goals are... and be sure not to take on too much risk as you can get burned. Since this is Stock Picky, I will leave you with two long term investments. Google (goog) for all you young fellows out there... there's this new thing called the Internet perhaps you've heard of it, and Royal Bank Of Canada (ry) for all of you grey haired folks which pays out a hefty dividend and has always been dedicated to increasing shareholder value.

Good luck with all your investments and let me know if you have any questions...

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