Does is it take money to make money?

It doesn't always take money to make money. You also don't need a college education, a high paying job, or any money at all to start. All you have to do is know what you want, have a plan, and stick to it. In other words, all it takes is a little discipline. The problem when it comes to money, however, is a little discipline is often a rare commodity.

Many financial advisors sell different types of products. One such product is insurance. Insurance is a very important product and needs to be considered as part of your financial plan, especially when you are first starting out. Start with realistic goals, and then improve upon or add to the goals as your education and experience increases. Always remember that it's best to start by walking before you begin to run in a marathon. As someone once said, "Life is a cruel teacher, it punishes you first, and then gives you the lesson." Like it or not, that is the process of true learning. Investment basic rule number two is to convert earned income into portfolio income or passive income as efficiently as possible. Earned income is generally derived from a job or some form of labour. Portfolio income is generally derived from paper assets such as stocks, bonds, mutual funds, etc. 

Portfolio income is by far the most popular form of investment income, simply because paper assets are so much easier to manage and maintain. Passive income is generally derived from real estate. It can also be income derived from royalties from patents or license agreements. Investor basic rule number five is that a true investor is prepared for whatever happens. A non-investor tries to predict what and when things will happen. For instance, you could have bought a piece of land for $500 an acre twenty years ago. And look at it now. Someone built a shopping center right next to it, and now the same land is $500,000 an acre. Then, if things don't follow the KISS (keep it simple, silly) formula, then the risk is high i.e. if someone cannot explain the investment to you in less than two minutes & you understand it, don't accept the investment. All too often, they'll try to make investing sound complex, ask him or her to use simple English. For instance, p/e means how expensive the stock is. And a cap rate is a term used in real estate to measure how much money the property puts or does not put in your pocket. 

Also note that roughly 80% of the rich become rich through building a business. The reason is that the builder of a business will always trade money for an asset. One of the main reasons the poor and middle class struggle is that they value money over true assets. Financial literacy is one of the most important investor basics especially if you want to be a safe investor. Just as a doctor uses x-rays to look at your skeletal system, a financial statement allows you to look into an investment and see the truth. For instance, most investors look at the stock price and then the stock's p/e or price earnings ratio. The p/e of a stock is an outsider's indicator of the business but an insider needs other indicators. Investing in the hopes of making more money so you can pay bills or buy a bigger house or a new car is a fool's investment plan. You invest for one reason: to acquire an asset that converts earned income into passive or portfolio income.