How Do You Become a Great Investor? Learn How to Shop!

Daniel Penzing
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Why Active Investing?

There were not too many years ago when most people went to a bank or to the office of their stockbroker and handed over their hard-earned money for the privilege of having someone else invest it for them.

Today, this is no longer the case. The Internet has changed things forever.

While a few years ago, the majority of people were avid spectators as professionals picked stocks for them, they are now a force to be reckoned with. A new breed of investor has emerged, one that demands a lot more knowledge from those that manage their money.

People today have started to take their finances into their own hands. They demand more information about the companies they invest in and expect a bit more from the professionals who manage their money.

It is expected that from this new breed of investors, we will see significant changes in the near future. The next decade will witness a new breed of investor that will lend shape to the future of investing. We call your average investor.

The changes that are about to take place will be more than just changes in fashion and trends. This has more to do with how we manage our money than it does with fashion trends.

In fact, it is estimated that by the year 2010, the majority of market research will be done by investors and not professionals. Traditional research reports will soon disappear. Information that used to cost a fortune will soon be obtained by the average investor for free.

Learn to Become a Better Investor by Shopping

If you don’t have the money to invest, you can’t get wealthy. That’s why it’s so hard for the average person to become a rich investor. But one great way of earning more money or helping you to manage your expenses is the art of shopping.

Shopping is an activity that most people undertake on a daily basis. Almost everybody participates in the activity of buying and selling goods. By doing so, they add to the economy and have some control over the ways in which their money is spent.

The spending decisions of every person have an influence on the economic growth of a country. If you hope to become a successful investor, you need to know how to shop. If you can buy the right things at the right time and save money instead of spending it, you are already a great investor.

Stores and shops are everywhere and they sell a wide range of consumer goods. All it takes to become a great shopper is a bit of knowledge and practice, and you can learn it from the following tips.

What's the Two Factors for Value Investing?

There are two factors that play into the value of an investment. The first of these is the intrinsic value. This is the actual worth of the investment, as opposed to its perceived value. You may be able to get a better deal on the investment if other people think it's worth less than it really is. It can be very difficult to determine the intrinsic value of an investment though. Shopping for investments is much like shopping for anything else in your life (whether basic household items or a luxury car), you can determine the price of the items based on an appraisal of the item itself. You could be shopping based on your own preferences, or you may have a set price you are willing to pay based on how much you enjoy the item. However, the intrinsic value will be in line with the price that you pay for it.

In Summary

First, there are two basic kinds of shoppers: bargain shoppers and comparison shoppers.

Bargain shoppers like to shop around for the best deal (but not necessarily the cheapest price).

Comparison shoppers like to compare similar brands (but not necessarily the best price).

If you are a bargain shopper, don't bother buying a pig in a poke.

Instead, identify your best shopping time. Then shop for the cheapest price on each item.

If you are a comparison shopper, don't bother looking for great sales.

If the item is a bargain, it is still likely a good comparison buy.

Remember: if you want to buy quality, you have to pay for quality.