Join        Login             Stock Quote
Top News :  

How To Explain Different Financial Vehicles Using This 1 Great Analogy
By: Option Alpha   Wednesday, February 1, 2012 1:05 PM
Will it be fast yes, but it will also likely end in a loss of control and an accident. Is it to say that the 16 year old will never be able to drive the Ferrari? Certainly not, it only requires training and experience with the vehicle.

Investing is similar to driving in that it takes practice and education to overcome fear and doubt. Once you have an understanding of how to "Drive" one vehicle, new vehicles will require only minor adjustments for you to become proficient.

2 Types Of Cars You Should Have In The Garage

In general, all investment vehicles can be compared to vehicles. There is a great number of vehicles in the world as there is a great number of investment tools. The two types of vehicles we will focus on are:

  • The daily driver (the car we will use to make a living)
  • The race car (the car we will use to make a fortune)

Each vehicle requires specific disciplines to be mastered before the vehicle can be fully utilized. If you want to drive a race car, time and money must be spent learning everything about that vehicle. What are the requirement for entry? What are the rules on the race track? Is there specific experience requirements?

Which Vehicle Should You Learn To Drive First?

The Daily Driver is the vehicle that will make you a living. Many traders tend to skip this vehicle because they have a job that makes them a living, they believe the reason they should invest/trade is to make a fortune. Making a fortune is exciting and "when" they find that one hot tip they will be in the money. The issue with this approach is that most people that have a job to make a living, do not have sufficient time or money to learn the vehicle that they want to trade.

My recommendation to most people is to learn how to handle and drive a daily driver. Once the daily driver is creating enough income to financially support a "Race car", then start learning that new vehicle. With this approach even if the new vehicle is not what you expect, you will still be able to learn another vehicle down the road.

Guest Post by John Pierce

<< Previous Page  1

Comments Closed


Related Press Releases
Popular Articles
Recent Articles by Option Alpha

Subscribe to Email Alerts rss feed or RSS feeds rss feed for articles from more than 800 contributors and press releases, SEC filings and full text news from thousands of sources.

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.