Investments, Equities, Stocks had always been nothing more than a curiosity for me. The whole idea seemed so elitist. The newspaper banner headlines street shouting the butchering of the common investor didn’t help either.
But things took a turn for the better when I first heard about Warren Buffet (see picture) and how he became World’s then second richest man mostly through his investment business. (He is now the World’s richest according to the Forbes List of February 2008: http://en.wikipedia.org/wiki/List_of_billionaires_%282008%29 )
My thinking has changed ever since. It’s no more a gamble or a science, but it’s an art that can be perfected!
It’s an amazing idea after all. Money working for you to get you more money is just too good to ignore. And all these without you having to even move your finger!! What is even more fascinating is that the money earned is capable of getting you more money. It is not magic but a concept called compounding put to good use (Well among all those geometry and Pythagoras we learnt in back in school at least there is something that’s relevant even now!!)
An investment of 10000 units of money may give a return of 600 units by year end (assuming a 6% interest). If the earned 600 units is left alone along with the original 10000 units then the earned 600 units is now also capable of earning more interest and the total investment by year end would generate a return of 630 units and the total sum becomes 11230 units. That’s the power of compounding for you!!
Now that we see how money can grow exponentially we come down to our original topic of investments and doing it correctly. That’s the correct point to bring Mr. Warren Buffet in again. Mr. Buffet had increased his personal savings in 1956 to $140,000 through judicious and carefully planned investments and he further increased it to $1,025,000 in 1962. Gosh a 600 % rise in 6 years. That’s what correct investments are capable of doing to your bank balance.
The point to be noted here is correct investments because as much exciting it may seem the money doesn’t come easy and if you are not careful you may even lose what you have. For it is not gambling where you might speculate and make a quick buck!!
With my own limited experience I can say with conviction that if there is an investment strategy in place and the investor meticulously does her ground work in choosing the right investments then there is ample scope for good money to be made. There are numerous types of investment opportunities available to suit the appetite of every type of investor and if the homework by the investor is adequate she will surely be rewarded 
accordingly.
Let me take the example of investing in stocks, considered a risky investment medium by many, a rash investment in an equity (stock) based on hearsay or a hot tip would always be destined to be nothing more than a gamble whereas an investment decision based on meticulous ground work into a company’s profile and its fundamentals would not only give the investor the insight to decide whether or not a stock is worth her money but also help her in taking a call about that stock in choppy weathers when the market is in ‘massacre’ mode.
So an investment is sound only when it is backed by a sound research into the fundamentals. If you don’t know what you are doing you are surely inviting a lot of trouble ahead.
But do all investors who perfect the art become Warren Buffet? Amm... Well I am not the right person to answer that question because I am just an amateur exploring this subject. But I think there is lot of foresight that matters in this business, which is behind all those success stories we all see, and not everyone has that.
A person who would have had the foresight to invest in the Microsoft IPO in 1986 would have seen her money grow by more than 50000 % in 2004.
Almost every body in this business is searching for the next Microsoft or a Google but surely it won’t be easy to recognize even if it is right there in front of us because “that eye” is not there with many of us.
One thing is certain though, in these times when financial planning for retirement is more and more becoming a personal obligation than of the government, sound investments have become a necessity to maintain that life style when the steady income stops coming.