The stock market is just one of the alternative ways of investing savings.
To invest one’s entire savings in the stock market to take off, to tie it to stocks would be wrong.
Savers should remember the following:
(1) Make sure that at least 1/3 of your savings are invested in liquid assets. Liquidity means that money can be obtained at any time. For example, you have deposited money in a bank. You can withdraw it at any time. For example, you have bought gold or foreign currency. You can sell them at any time. For example, you bought real estate. You may not be able to sell it at any time, even if you lower its price. Real estate is also different. It is more difficult to sell an apartment than a detached house. It is more difficult to sell a house than a plot of land.
(2) Invest your savings in areas that will not be eroded by inflation. For example, if inflation is 70 percent and bank deposits yield a net return of 40 percent, the principal is eroding.
(3) The amount of net income generated each month and each year by alternative investment areas for savings shall be announced every week in the economic pages of newspapers. Look at these tables and decide for yourself. Here are a few formulas:
(1) You have 1 million lire:
Buy foreign currency with half of it and keep half in a deposit account at the bank, just in case.
(2) You have 5 million liras:
Put one million liras in the bank. 2 million liras Buy foreign currency. Put 2 million liras in stocks. Try it.
(3) You have 25 million liras:
Keep five million lira in the bank. 10 million lira buy foreign currency. Play the stock market with 10 million liras. On the stock exchange and if things are going very well, you can take the money in the bank you add to the stock market business.
(4) You have 250 million liras:
Keep five million liras in the bank. 100 million lire buy foreign currency or land. With the remaining money on the stock exchange Play.
( 5) You have more money:
Keep a third in foreign currency. With a third you can buy land or buy a detached house. Play the stock market with a third.
Notice that in this narrative the wording is very careful:
It does not say invest in the stock market. It says play in the stock market. Because the stock market (as will be explained later) is a game. But it is a serious game.
They never say to buy gold. Because gold is not worth a damn, what to find. Yellow stays where yellow is.
Buying an apartment, dealing with a tenant, hard things to sell when you need to. Of course his money first buy a roof over one’s head or an apartment but it is essential to buy an apartment to rent out. is not bought.
