Daily Money Minute


Fotolia_54867638_XS_7“Never invest your money as though you are gambling at the casino.” ~Nouriel Roubini, Economist

It’s important to understand the difference between speculation and investing. Speculation tends to operate on the ‘greater fool’ principle. You buy an asset for a price in the hope that you can sell it quickly to a greater fool for a bigger price. There are professional speculators who can and do make money this way. Such people know what they’re doing. However for ordinary people speculation is like gambling in the casino. You might get lucky occasionally but over time your losses will outstrip any gains you might make, almost certainly by a significant margin. That’s why I never speculate. I’m an investor. I buy stocks and shares in solid, well managed, cash-generative businesses which have the ability to pay good dividends on a sustained basis. I buy stocks which I can hold for the long term, safe in the knowledge that I’ll get a steady income stream from the dividends regardless of any short to medium term volatility in the market. I then reinvest those dividends and over time I’ve found that this approach has given me a very good return on my money. If you want to make money, my advice is to be an investor not a speculator.

© Roy Sutton and Mann Island Media Limited 2013. All Rights Reserved.


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