Monday, September 16, 2013

Importance of Capital

Once you start earning money, you should use some of it to produce another income stream. One place to get an income stream is from dividends of stock companies.

Income from investing should be channeled back into other investments whenever you can manage this. You might have to sometimes spend this income. Life does not go smoothly. However, you should not consider using the capital from which this income comes.

It takes a long time to build up capital, but if used, capital can disappear in a flash. Reports that I hear about people who win lotteries are rather disheartening. It does not matter what the country is, Canada, US, UK etc., it does not seem to matter how much people win, it seems that in about 10 years, lottery wins are broke. They are worse off than when they won.

The thing with income from investments, you should be getting more income each year from your overall investments. However, when you have capital invested in stock, the capital you have according to the TSX can gyrate a lot. Basically the market goes up and down based on how people current view the future. People's view of the future keeps changing every minute. I would not worry about this. You should focus on income and how that is changing overall.

On my other blog I am today writing about Reitmans (Canada) Ltd. (TSX-RET.A, OTC-RTMAF)...continue...

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

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