In Investing, many people look for the safe asset class with higher returns on their investments just to ensure their safety of capital and appreciation of capital to meet future requirements or goals.
People who are active when it comes to managing their money and making money from money through investing in different asset classes are quite familiar with the Equity Asset Class and they keep majority of their investments in Equity.
For those, who are new to money management and Investing – Equity means an Equal Ownership in the business or businesses, when you are investing in equity you are participating in the growth of the businesses as well as you need to participate when such businesses face recessions in the short run.
Growth & Recession – Two personalities of Equity.
When you buy Equity you buy Equal Ownership in the business(es) which makes you an active investor as well as a Passive Partner of those business(es). When such business(es) do well in its operations it generate handsome profits and those profits are invested back to its business which increases the market value of such business(es) – So, you being the equal owner of such businesses(es) – your investments in such business(es) also increases with the market value of the business(es).
In this way, you participated in the growth phase of the business(es) and you could multiply your investment value within years, there is no limit for the success & growth of any business. Similarly, you as an equity investor have unlimited upside potential to compound your money.
Being an Equal owner of the business as you participated in the growth. Similarly, in any business there could be a recession in short run like decrease in sales which leads to low profits or even loss from the business operations which decreases the market value of such businesses in the short run which have a direct correlation with your investment value.
Recessions in any business could be temporary or even permanent, to make sure you don’t remain an equal owner in a business whose recession could lead to permanent recession due to management, process, bad service, non satisfied customers or regulatory changes – In such cases you need to be very active while selecting and investing in such equity, for this you can even hire professionals like Fund Managers, Research Analysts etc.
How Equity is Safe Asset Class?
In this post, so far I have discussed about two personalities of equity, right? To make equity safe asset class you need to learn how to make good friends first 😉
Most of the people don’t invest in equity because they think its very high risk asset class. In reality Equity is Safe Asset Class, How?
Equity is Safe for those who make it’s both personalities their best friend. If you will become best friend of Growth & Recession then you will become a successful Investor. Majority of people gets befriended with growth only and they never try to befriend with recession. In fact, they maintain a distance from recession which leads them to unsatisfactory & disappointed results from investing in this beautiful asset class.
Make Recession your Best Friend First and Growth will eventually follow your friendship. Yes, I’m serious.
Remain Invested or Investing during Recession will only help you to create enormous wealth through Equity, It’s not risky its safe if you are participating for decades.
The problem with common investor is that they invest in fixed income asset class for decades. On the other hand, they try to befriend with Growth Personality of Equity in order create quick money – Which is very high risk and as majority of people do the same they have constructed a belief that Equity is Risky – which is NOT TRUE!
Invest in Equity, Be the Best Friend of Recession First, Participate for the Long Run and Enjoy the GROWTH!