"Why?" you might ask.
The reason in simple, I believe that an ability to effectively manage your own money is the only realistic way to gain financial freedom in your life. You can always make money, and make more of it with a great deal of work, but keeping it is the hard part. A balanced approach to investing is crucial to remaining fiscally healthy.
When I received my first paycheck back in 2008, I wanted to go out and buy something immediately. It could have been anything, it didn't mater what it was just so long as I bought it with the money I had earned. But before I had the chance to, my father asked me if I ever considered investing the money. I asked him, in all seriousness, "Invest in what?" He looked at me like I had five heads!
It wasn't long before my father opened up his portfolio and showed me the list of companies that he owned at the time. I was impressed by the dollar amounts for sure, at the time I had not more than $2,000 in my bank account, but I was even more impressed with the percentage returns he had on many of his open positions, some of which numbered well over triple digits. Curious to know how he did it, I asked him how I could get started. He pointed me to my cousins Joseph and Thomas.
With their help, and the help of the many books they recommended, I learned of the many important tools that an investor must become familiar with to succeed, from technical charts to fundamental analysis and so on. However, the most important experience for me was figuring out things for myself. Any savvy investor can try to explain investing to you, and they can even give you winning stock picks and strategies, but learning through trial and error is the best way because it forces you to trust in yourself. And no one wants you to succeed more than yourself!
Since I started with a small amount, I put in half of my first paycheck, I didn't make a lot of money initially but my returns were impressive. After a while, as I became more comfortable with managing my own money (mostly due to the fact that I was succeeding more than I was failing) I was able to allocate more of my paycheck to equity investments. In a few years, I hit financial goals that I didn't think were attainable in such short a time.
Eventually, like my cousin Joseph, I began to realize that I also enjoyed helping other people who were interested in managing their own money. So, I started writing for Seeking Alpha and The Motley Fool. I even wrote my own ebook for Amazon Kindle.
Although I consider my financial freedom a large success, it really did start with my relatively small $1,000 investment and a little bit of confidence in myself.
Now, to answer the initial question, "Does it take money to make money?" My answer is yes, although it only takes as much as you are comfortable investing. When you succeed, which will most likely happen only after you fail a few times first, just as I did, you will learn to trust yourself and gain the much-needed confidence an investor must have to remain successful. Once that happens, there is no stopping you! As my cousin Joe is fond of saying, as long as you keep at it, "There is no way to avoid becoming wealthy."
Good luck and have fun,
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