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What will you specifically practice and in what sorts of situations? Do take time to write your response down. In my next blog , we will take a closer look at what has happened while working at home. The road ahead is far from simple and it will demand a new way of leading. In the fifth and final blog of this series, we will look at an approach you may consider using with your team as you co-create how you want to work together in a hybrid workplace world.
Working from home and beyond; the critical pivot point for bosses In our previous blog , we spoke about how the rabbit is out of the bag — everyone is working at home — and any attempt to put it back in the bag by removing much autonomy will be fought with great risk! For example, if you have relied on sensing how your people are by looking around as you walk to your office in the mornings, you may struggle when in a remote situation.
Tendencies to check in more often may result in employees feeling micromanaged and watched. At the centre of all of this is the tension that presents itself when faced with uncertainty and ambiguity and change that is unpredictable — and potentially pressure from above in the organisation — we move towards wanting to take more control in order to minimise risk.
We cannot help ourselves. It pulls us in the opposite direction to where our leadership skills need to take us. Of course, BHP and Telstra are fairly large companies and it has to be said that there would be a strong influence from the Australian workforce dynamics where, for example, there is one of the largest percentage of part-time workers in the world.
So flexibility had been considered for a long while, though not all companies get it right. This all said, these organisations would not be alone in their considerations and their expectations that their managers have more control than many feel they may have.
A Possible Response for a Manager If you are a manager who would like to stop and review how you might be going at this time, here is a process you can go through. Take time to describe what is happening around you and within you. Describe your behaviour and that of others your team, your boss es and organisational stakeholders.
Describe interactions between you and others, and describe interactions between others. Describe the style and language of emails, video calls and conference calls e. Describe how you feel and which emotions are present in which situations. What are you enjoying and what are you missing?
What takes most of your attention? What stories run around in your head? What are your hopes and fears? Describe what is happening, what is not happening and describe, separately, what you would want it to be. Look for patterns. Think hypotheses. Be curious and just describe while resisting the temptation to conclude, make assumptions or any analysis. That will come later. So What? Take time to consider this. Remember, Leadership is not a rank, it is a responsibility.
Now What? How can I identify the behaviours of mine that potentially give my people the sense of distrust and micromanagement? What aspects of my leadership have I relied on in the past and are now not helping me? Which micro-skills could help me, as a manager, at this time of uncertainty? Personal reflection is important and identifying something that you can tangibly work on would be helpful to you. In addition, shining the light of researched wisdom may help shape your thoughts further and this will be the subject of my next blog.
Enjoyed this? Keep reading… The rabbit is out of the hat; remote working works… now what? Technology preferences and user behaviours have emerged, and yes, the internet is awash with articles, comments, polls, how-tos, and blogs around all this. It will be a slower transition. What can you do to stay focused and upbeat during this uncertain time?
Who can you vent to? So what do leaders do now? During the pandemic everyone had to manage things while at home. By and large, everyone has coped well with this new-found autonomy from the office! While it is clear that many miss the workplace and being around their colleagues, it will be clear that when we are all back at the office, other choices will be taken away. So, the rabbit is out of the hat and any attempt to put it back in by removing too much autonomy will be fought with great risk!
Remember… …people join good companies but leave bosses and much research over many years keep confirming this fact. This is a major chance in many ways, because while there are significant business imperatives, if done with a good heart, people may be a bit more forgiving as you try and find better ways to work with your people. The one thing I knew from my years in corporate life was that success comes from collaboration and building great relationships, and therefore that is what I hung my hat on.
I am delighted to say that six years later we have many successful partnerships and collaborations which have resulted in us working in industries and with clients that I had only hoped we would be able to work with. We know from the extensive research we have done around high performance leadership with our client portfolio that collaboration is one of the most underdeveloped behaviours of global leaders in the workplace right now, closely followed by a lack of conceptual flexibility. Conceptual flexibility is really all about being thinking agile, flexible with your approach and having openness to doing things in new ways.
For me these two behaviours have been the foundation of building our business. Looking for partners and great people to collaborate with, whilst building diverse relationships leveraging different ideas to create solutions and programmes for clients that are fresh and challenging.
Collaboration for me is all about learning, developing, being better for the relationship and looking for ways to be leaders in the market through sharing not competing. From 1st July EDIT Development is stronger for having an official partner based in Singapore who bring diversity of thought, understanding of cultural difference whilst being grounded on the same values and ethical foundation that we pride ourselves on.
A business focused on doing things in new ways, using blended learning solutions whilst keeping at its heart that relationship is what keeps our heart pumping. The relationships with our clients, partners and the extended global team we have working under our brand. Robyn says: The way we establish, build and keep our relationships with clients, partners and our network is extremely important to us here in Asia. Being respectful, authentic, open, truthful and grounded is important to us.
Our clients face very real challenges and we like to work alongside them, co-creating solutions. This is how we do business at Praxis Management Consulting. Finding good partners can be hard. Yet, on the other hand, when you meet kindred spirits, its easy. Strangely, I was meeting someone else at the time, but she happened to be there. It is always important to remain open to those we meet, as you never know when these gems come along.
As we at Praxis work with Leaders in Asia, we understand that many of these leaders come to Asia from other parts of the world often representing their MNCs and organisations. These leaders come and work with the many great leaders born and bred in Asia. And increasingly, we are seeing many Asian leaders going abroad as their Asian businesses grow globally.
Leveraging regional relationships, knowledge and experience and bringing the best together as we support leaders who operate in mixed cultural and geographies will be key. Exploiting the power of real inclusion and true diversity is a tremendous opportunity in this complex world.
Thinking differently about how we partner to deliver support to clients globally is important, just as it is important to constantly explore new, fresh and better ways in which to do it. This will make for a great partnership, and one I really look forward to! That Elusive Perfect Meeting! If we are truthful to ourselves, that elusive perfect meeting is most probably a figment of our imagination.
Even if we are in charge with all the responsibility in our hands, the frustrations can still abound. If only everyone would talk, and talk about the issues at hand and not just present their needs when asked, or to defend their actions. These meetings tend to end up being very formal.
What we often do not realise is that that perfect meeting may be closer to reality that we imagine! It frustrates us. And poor meetings abound. We can all make suggestions for improvement. If only the chairperson would ….
There are so many expectations around meetings including what they are for, how everyone should behave and what a successful meeting should feel like. So, how can we make our meetings work better? Much has been written about this topic and references are included below , and yet poor meetings abound! By reframing our mindset, it will affect what we are prepared to do or not , how we may choose to view others and their views, and how we respond to them. Choosing to Focus on Others There can be multiple purposes happening in a meeting.
The collective purpose is one thing, but we also hold our own purposes whether we acknowledge it or not , while others hold theirs. We all hold responsibilities and perspectives, and to be successful, we need to engage others in order to make things happen. When we meet resistance, we tend to work harder at making our argument more compelling. When we are called to meetings where we are not engaged by others, we get bored and wonder why we are present.
Tremendous benefits can be discovered for everyone including ourselves if we turn our focus away from ourselves and focus on others. Covey concurs. How are they motivated? What is their style of thinking?
What values do they hold? What are their needs? What are their perspectives and views? How can we best connect with them? How can we best help them be successful? If we do this, we just may find that everyone becomes more engaged in the conversations that occur at our meetings. We may also find that we will understand, more clearly, what matters to everyone and how to best influence them. And, we may even find that everyone listens to us and helps us with what we need to achieve.
Often, the elephant stands in the corner of the room. And yet, there is a reluctance to name the elephant. This adds to our frustrations about meetings. The added challenge of these conversations comes when more people are involved. We have different personalities, think differently and hold different responsibilities. So, we need some guidelines to help keep these conversations useful and rich. Resorting to many meeting formalities tends to kill the energy and engagement around these conversations.
If we are meeting to explore new concepts around a new project, say so. Are we on the same page? What does that really mean? And how do you really know if we have achieved it? The chances are that everyone has a different understanding of what that same page looks like. There are many other examples of corporate jargon, but the point is clear.
Often issues left unattended with the hope someone will address them. Some questions that might help could include: What is the purpose of this meeting? Have we got the right people at this meeting? What is the right thing to do? How might we ….? Are we solving the right problem? Who are the stakeholders that are impacted by ….?
The power of robust conversations is when everyone contributes to the thinking that needs to be done while helping each other with that thinking. Complex problems get solved this way, amongst other things. What Stops Us? How often do we go to meetings with our own agenda? We need our proposals accepted, or our products bought. We want to look like we are doing our job well while being responsible.
Our values also regulate our behaviour, as does our insecurities. Unfortunately, we tend to opt to protect ourselves often unconsciously. Another example is — if we feel we need to maintain control, we may steer the conversation in a certain direction and limit the contribution of others. At meetings, we do need to discuss the real issues at hand, and engage everyone in the process.
It does behove us to be self-aware about what is regulating our behavior and how our behavior is impacting others. Our lack of specific skills may also stop us achieving useful meetings. These may include the abilities to listen deeply and facilitate an inclusive conversation. Imagine — That perfect meeting! Imagine, a meeting where we are clear about its purpose and form.
This allowed us to perform content analysis Pennebaker et al. We derived one measure for each of these categories in the following way. Dominance 1—monopolization Dominant personalities talk often, for long periods, and do not let others talk Norton Several studies use the amount of speech as one dimension of their measures Aries et al.
Thus, we measured this tendency of CEOs to monopolize the conversation as the number of words a CEO speaks in the presentation section in relation to total words spoken during the presentation section. Following research showing that dominant personalities express their opinions more frequently Kalma et al. Dominance 3—assertiveness This measure reflects the extent to which a CEO speaks assertively or forcefully during the calls.
Especially more recent research focuses on the assertive dimension of dominant behavior Cheng et al. We measured the use of polite words using content analysis with the LIWC software and included the words please, thank, thanks. As such, our measure of dominance is time invariant, purposefully reflecting theoretical claims that dominant behavior should be a stable personal disposition. Footnote 4 For each of our three core independent measures, we first take the logarithm and then standardize its value.
Our analysis is based on transcripts of earnings calls in which the CEOs in our sample took part between January and December Control variables We deploy a series of controls at various levels of analysis. Earnings call controls We controlled for the total number of earnings calls that were available for each CEO, Number EC, and the average number of top managers who participated in the earnings calls, Participants EC.
Firm and industry controls Prior research showed that one key determinant of organizational structure is firm size Collins et al. Footnote 5 In addition, we also included three-digit SIC-code dummies to control for industry effects. Finally, given that recent research Guadalupe et al.
Footnote 6 Lastly, we also controlled if a specific firm met the earnings forecasts, which could in turn affect if the CEO engages in impression management in the earnings calls e. Specifically, we collected earnings forecasts from the IBES database see e. Furthermore, as a second complimentary control we coded a variable if a firm was above or below their performance aspiration level.
Specifically, following prior work e. This procedure resulted in two control variables: positive performance feedback and negative performance feedback. We follow prior literature and use a lagged design, to account for the fact that structural changes require time to manifest themselves Acemoglu et al.
Therefore, all right-hand-side variables refer to , whereas the dependent variables are for Our dependent variable is either span of control or COO appointment. Results Table 1 presents means, standard deviations, and correlations for all our variables. Our data for span of control and COO appointments are similar to those in other studies examining structural organizational variables.
For example, Guadalupe et al. Similarly, our variables derived from earnings calls—the mean values for total words and references per earnings call—are comparable to those in recent studies using earnings calls from large American firms Mayew ; Li et al. Correlations appear to be small to moderate between most variables, except for the word and reference counts that constitute our three dominance measures.
Footnote 7 Table 1 Correlation and descriptive statistics Full size table Table 2 reports the results for Hypothesis 1, which posited that CEO dominance would be positively related to span of control. We first test each of our three dominance measures separately across three different specifications. In addition, we test for joint significance of the measures within both OLS and Poisson estimations and furthermore test our predictions, in order to eliminate time-invariant unobserved heterogeneity, through fixed-effects analysis on auxiliary panel data.
Overall, our findings support our hypothesis. The separate insignificance of the dominance measures in the joint specification is attributable to the high levels of correlations between the three measures, which disguises the differential contributions of the three measures in Models 2. Footnote 8 That said, the overall explanatory power of our models increases when including all measures for Dominance in parallel, even when adjusting for the lower degrees of freedom, suggesting that our three measures all imperfectly but distinctly differently capture parts of the dominance-related variance.
Again, we test each of our three dominance measures individually and jointly. Table 3 COO appointment as a function of CEO dominance Full size table Discussion of results and exclusion of alternative explanations In the following, we discuss several possible concerns regarding the validity of our findings and provide additional empirical evidence which we collected to address these issues.
Eliminating time-invariant unobserved heterogeneity through fixed-effects analysis on auxiliary panel data. First, similar to other studies examining the relationship between personality traits and firm-level effects e. Considering the time-invariant nature of personality traits, such an approach seems reasonable, particularly when dependent measures are not readily available over time as in our case.
That said, such an analysis stops short of eliminating time-invariant heterogeneity at the level of the organization. To tackle the latter problem and to corroborate our cross-sectional findings, we thus compiled an auxiliary panel dataset of SP firms in the period of — that would allow us to estimate firm-level fixed effects. To that end, we downloaded additional 22, quarterly earning call transcripts compiled from January to December provided by Thomson One for measuring dominance.
We then matched our data with the Compustat and Execucomp databases, from which we drew our dependent variables and controls. Due to missing data in both databases, this process yielded a sample constituting complete data for 5, firm-year observations by firms and CEOs with an average of 6. Importantly, to compensate for the lack of precise span-of-control information pertaining to the years prior to when predecessor CEOs were in office , we computed an auxiliary dependent variable to test Hypothesis 1; notably, we measured the size of the top management teams TMT that current and predecessor CEOs had assembled around them—following coding procedures laid out in earlier works e.
Adhering to our earlier estimation strategy notably the lagged design , but exploiting the additional variation over time, we finally estimated a series of different models on the above-described panel data. Table 4 summarizes the results. Models 4. As can be seen from Table 4 , the panel estimations support our cross-sectional findings in that coefficient estimates for our core independent variables—the dominance measures—point in the hypothesized directions and show statistical significance.
It is the convergence of results across Tables 2 , 3 , and 4 that makes us confident overall that CEO dominance truly exhibits the hypothesized effects. We use our panel dataset also in the next analysis to further tackle endogeneity concerns of our analysis.
Endogeneity control One important remaining concern is that our estimates could be biased due to the sorting of dominant CEOs in companies with certain organizational structure characteristics. In particular, prior research suggests that executives with certain attributes may be specifically attracted to and hired by firms where these characteristics are considered desirable due to the firm's specific circumstances e.
To address such concerns, we followed prior research Chatterjee and Hambrick , , and controlled for the possible case that dominant CEOs are drawn to certain situations. To do this, we run a regression of our dominance measure on a set of contemporaneous and antecedent variables. The antecedent variables were observed in the year before the CEO entered the office and included the calendar year, the performance, size and diversification of the firm, and change in performance.
Of these variables, none significantly predicted our measures of CEO Dominance1 and Dominance2 and just change in performance weakly significant predicted our CEO Dominance 3 measure. In sum, our additional analysis suggests that endogeneity due to sorting was not a main driver of our results. Yet, we also note that other research designs might be even more effective in addressing such concerns. Operationalization and measurement validity Third, one might challenge the validity of our original unobtrusive measures in two ways.
On one hand a , one may wonder whether the measures reflect characteristics of the individual CEO or of the firm. On the other hand b , one may question whether our measures truly capture dominance in CEOs or some other qualities. We conducted several tests to address both concerns.
If a company had institutionalized how a CEO should behave during an earnings call, then this ingrained corporate practices might make a CEO appear non- dominant and bias our findings. To assess whether our measures were mostly driven by factors related to the CEOs or instead to their firms, we followed Chatterjee and Hambrick and initially calculated for every predecessor of the CEOs in our sample—for which earnings calls on Thomson One were available—Dominance measures 1 and 2.
This procedure yielded CEO predecessor—successor pairs. Furthermore, we identified in our sample the CEOs which have served already as a CEO in another public company included in our sample. This pattern together with pattern described before makes us feel confident that our measures do—per our intentions—reflect aspects of the individual CEO personalities as opposed to characteristics of their firms.
Further, to explore whether our dominance measures captures dominance or if the performance of the company affects how the CEOs behaves during the earning call we calculated for every CEO in our sample for which earnings calls on Thomson One were available—Dominance measures 1, 2 and 3 for every quarterly earning call in our panel dataset.
We then calculated the variance of our dominance measures within a CEO across earning calls. This procedure yielded data on CEOs in our sample. To test the construct validity of our dominance measure, we asked two research assistants to independently rate the degree of dominance for a subset of the CEOs in our sample. Importantly, the research assistants did not receive any information about our three measures. The assistants were then asked to read through the earnings calls and to rate the degree of dominance of each CEO on a 7-point scale ranging from 1 not dominant at all to 7 highly dominant.
To keep the task manageable we asked them to rate 50 randomly chosen CEOs from our sample. This strongly indicates that the perceptions of our trained assistants correspond to our measures of dominance and provides corroborative evidence that our measures indeed capture the extent to which CEOs exhibit a dominant personality. Construct relevance and distinctiveness Fourth and finally, considering the predominant focus on CEO narcissism in earlier works, scholars may wonder whether what we know from those previous studies renders our investigations obsolete.
In particular, this might be the case if narcissism and dominance systematically co-occurred and if CEO narcissism exhibited effects on organizational structure similar to those exerted by dominance. To rule out this alternative, we collected additional data. Notably, drawing on the prominence of CEO photographs in annual reports, and following earlier research using this measure of narcissism see, e.
In particular, we hypothesized that CEOs who are high in trait dominance will have a larger span of control and will be less likely than their less-dominant peers to appoint a COO to their top management team. To test our hypotheses, we computed three novel measures of CEO trait dominance based on quarterly earnings calls with analysts and related them to the span of control and COO appointments.
Despite all residual imperfections that characterize our study, just as with most other empirical investigations, we believe that our results obtained on a sample of CEOs of large US companies strongly support these hypotheses. As such, our study makes several important contributions for different communities of colleagues. Scholars investigating organizational design as a source of sustainable competitive advantage Aghion et al.
Our results are particular relevant in the light of recent research on the flattening of firms i. Our findings are suited to reconcile this seeming contradiction. Notably, as we suggest, CEOs may simultaneously increase their span of control and retain more decision-making authority by not appointing a COO. In general our findings are also in line with recent results of laboratory experiments Bartling et al. Moreover, our findings contribute to the literature on CEO personality traits and upper-echelon theory more generally see, e.
Finally, the results of our study might also be of value to management practitioners. Naturally, our work leaves us with more questions than answers. Several of these questions stem from inherent limitations in our initial study on dominance and organizational structure—limitations that represent avenues for future research. In the following, we briefly discuss those that seemed most important to us.
For one thing, we do not directly explore the link between CEO dominance and organizational performance.
Investing money arbitrarily without a plan, however, is not a good idea. Therefore, first think about how much money you want to invest and decide how much time you have to invest. Based on this information, you can decide what kind of investment products suit you best. An index fund requires little time and a small amount of capital, while active investment itself often requires more time and a larger amount of capital. By drawing up a clear plan, you can determine which investment method suits you best.
These days, buying and selling investment products such as shares is done entirely through the internet. When selecting a good provider, it is advisable to pay attention to the following aspects: Is the broker a reliable party? Can you invest at low transaction costs? Can you try out the possibilities with a demo? What is the minimum deposit to invest? On the basis of the answers to these questions, you can determine whether a broker suits you.
Would you like to know which broker you can best invest with? Then take a look at our comparison of best brokers and try out the different options: compare brokers Step 5: Stay sharp It is then important to stay focused: draw up a strategy and follow the latest market developments. Try to make your decisions as much as possible on the basis of rational arguments.
Many dummies make the mistake of letting their emotions guide them too much. Only with very hard work you can achieve a higher return. Rule 3: focus on the long term: even if you invest in the short term, it is important to have a long-term plan. Rule 4: Risk diversification is an important part of any investment strategy.
By spreading your risks, you ensure a more stable and predictable return. Rule 5: Look at the overall picture of your financial situation and determine on that basis what your investment strategy should look like. A sudden rise or fall does not necessarily mean that a company has lost its intrinsic value.
Rule 7: Take your investment horizon into account: when you are young you can take greater risks as you have more time. Rule 8: do enough research: you work hard for your money and buying and selling bad stocks costs you money. Rule 9: Research taxes: you often pay taxes on your investments as well.
Rule limit the costs of your investments as much as possible. All the costs you save will give you more room to achieve a good return. Rule remember that beating the market is very difficult: even professional investors rarely succeed. Therefore, consider whether it is realistic that you will do so. Rule Beware of hiring investment advisors. By teaching yourself the basics you will save a lot of money.
Rule Accept that it is almost impossible to predict the future. Rule In the end, your personal health is most important: therefore, make sure you can sleep well despite your investments. Learning to invest is important If you are still a dummy when it comes to investment, it is important to first learn how investment works.
For this purpose, it is wise to first practise with free investment software. After all, the practice account is completely realistic and can also be used to trade with real money. The way the demo account works is therefore entirely in line with what it is like to invest with real money. Investing with real money When you have learned enough you can easily switch to the real money mode within the software. In real money mode you can deposit money yourself with which it is possible to trade shares and commodities CFDs.
This allows you to take advantage of the smallest price fluctuations by using leverage. Useful information for dummies Dummies often do not yet know how to invest. It is therefore wise to learn a lot about investing first. However, this book is quite outdated and contains little information about the new possibilities that online investing can offer you. It may therefore be wiser to first take a course on investing.
On trading. The biggest recommendation when you want to get started quickly is our Plus tutorial. Use the button below to follow the tutorial directly and learn the basics: Investing tutorial What can dummies invest in? As a new investor, you have many investment options.
In this part of the article we will discuss what you can invest in as a dummy. Shares As a dummy, it is totally possible to buy shares. Some dummies may not know yet what stocks are; shares actually give you the co-ownership of a company. Stocks can change in value, so you can make a price gain.
You can also get a dividend on your share; these are a kind of profit distributions. Do you want to know the best way to buy stocks? Bonds are loans issued by a company or the government. Bonds have a limited risk, as you get your deposit back at the end of the term. During the term of a bond, the price of the bond can fluctuate.
Would you like to know more about investing in options? Then read our article on the subject: Invest in bonds Derivatives Derivatives are contracts on, for example, shares or bonds. This way of investing is especially attractive when you are going to invest with a small amount of money. An example of a derivative is the CFD or contract for difference ; you can trade these derivatives with an online broker.
Do you want to know more about trading in derivatives? In our derivatives special you will learn everything you need to know about investing in derivatives: Invest in derivatives Forex Forex is another interesting investing option for dummies.
Forex is the activity of trading in currency pairs. The price of currencies often moves up and down less quickly because it is the largest market in the world. Also, exchange rates are often easy to understand and you only have to look at global trends. This makes exchange rates more predictable than, for example, stock prices.
Do you want to know how investing in Forex works? Then read our special about investing in Forex right away: Forex trading Raw materials Raw materials are also popular as an investment option. Nowadays, most people trade in raw materials via derivatives; yet it is also possible to make physical investments in gold and silver.
However, in practice it is not possible to physically buy commodities such as sugar and coffee, which are usually traded in large quantities. Do you want to know how investing in commodities works? Then read our special about investing in commodities: Invest in commodities Options Finally, there are options, but options are very complex for most dummies. Among other things, you can use options for hedging where you can hedge the risks of an investment position when you expect a sudden sharp fall or rise.
Do you want to know how options trading works? Then read our extensive manual: A few final remarks for dummies Start small: do not invest large sums of money! Keep learning: try to discover new techniques all the time. Limit your loss: use a stop loss to limit your loss.
Author About When I was 16, I secretly bought my first stock. It is my goal to educate people about financial freedom. For somebody it will be hundreds of thousands of dollars, for others tens of thousands, for others maybe only a few hundred dollars. Whatever the figure is, that is a capital that can be used for an investment. You just have to continue along this journey and take with you the information you will find in InvestinGoal. Give yourself this opportunity.
Once finished this and the other simple courses, you will have the instruments to start investing and build on your personal capital, whatever it might be. But the definition we like the most is only one. To invest means let your money work for you, in your place. We need money and money is at the basis of a myriad of key activities that pertain our life. Putting our money, as someone says, under the mattress, will turn us into money possessors. But being possessed is not the purpose for which money exists.
Money is there to be utilized. You can use it to do your shopping, to buy goods, the smart phone, the automobile and in general everything that passes through your head. Also having a small untouchable amount for the dark times is not a bad idea. On the other side, you can use your money to make other money. Then, money will do the rest. The two ways for investing money We can basically distinguish 2 major investment categories.
The first: to buy a good, and then wait for this to raise in value over time, so to be able to resell at a higher value and cash the profit. This is the method that probably everyone knows. The most well known in this context is the purchase of a property. Another example of this type of investment is the purchase of works of art.
In this case, rather than hoping for a value increase based on time, the investor hopes for an increase of the quotation and popularity of that specific artist or type of work. By purchasing a share, the investor becomes owner of a piece of that company, and he hopes the value of that company will rise, so he can then sell that piece of the company to a new owner, or another shareholders, at a higher value, and cash the profit.
Now we can even buy a financial instrument and earn money if its value decreases. It might seems crazy, but actually is not. We will discuss this concepts in the next course dedicated to the Forex market. The second: to lend money for a certain period of time and then get them back with the addiction of an interest.
By buying a bond I am lending my money to that country for an amount equivalent to the value of that bond at that time, and the country is committed to give the money back to me on a specific date, with the addition of a pre-determined interest, with no possibilities of escaping from this payment, penalty the declaration of bankruptcy. There are many types of bond, not only for country, but also for companies.
By buying that bonds, you lend money to the company that issued them. The company will reward us after a certain period paying us an interest in the form of coupons. There are a lot of possibilities, all different and each with its own strengths and weaknesses. With these InvestinGoal courses you have the chance to discover the fundamentals of the art of investing, and then specialize in the most innovative, called Social Trading.
The choice will be up to you. A very important difference The important thing, after realizing what an investment is and how you can invest your money, is definitely to understand and have clear what an investment IS NOT. Investing is not gambling. A lot of people still make this associations. You can also bet on the stock market pulling a dime, but do it in a professional manner is another thing.
The art of the investing money is based on reasonable expectations, which derive from statistics, derived in their turn from professional studies done on that sector. An investment is based on these components: study, experience and facts.
There are statistics data and there are systems that work via them and that can produce a gain in the best way possible. As investor you have to learn to recognize and foster those investment systems that statistically, in the long run, are profitable. But above all, you will always have to deal with risk. First of all you needs to accept it, because it exist and it will be your ubiquitous travel companion. The financial world is constantly changing, and together with the classical and so to say historical methods, there are now new innovative ones.
In this lesson of the course we will explain in very simple terms the main financial investment methods of today and their main features, including also the one with which you may start with very little capital and in a very short time. Owning one or more shares of a company literally means to be a member of that organization, then to have the right to vote, but, above all, the right to earn from the profit produced by that company, usually in proportion to the number of shares held.
However, the peculiarities might be many, and not all companies pay the dividends to its shareholders. In that case, the shareholder will be able to make money from his investment gaining from the growth in value of its shares, and the subsequent sale to another investor. Conversely, the more a company is weak, the more its shares will be unattractive, people will not want them and they will lose value.
This means that if shares pays no dividends, you can only gain from the fact that they increase in value, which in other words means to speculate on the difference between the sale and the purchase price. Usually the more risky the company to which you have lent money is, the higher the interest will be. Conversely, if the company is considered less risky your investment will be paid at a lower interest rate.
Or, if the company knows to be less attractive than others, to attract customers it can put into circulation bonds that pay a higher interest. The fact that they are called bonds obligation is to indicate that those who receive the money borrowed are obliged to repay the capital, plus the interest on the indicated date.
So, we have a fixed date and a fixed return. From one point of view we can say that bonds are risk-free investment, although they are not. The companies can still fail and therefore no longer fulfill their debts, and never as in recent years we have had firsthand experience of the fact that states themselves may go bankrupt see Argentina.
Shares on the other hand can offer much higher yields, but there is obviously a risk that these returns do not come at all. The manager then go with that capital to buy stocks and bonds and build up the mutual fund. The profits are then distributed in relation to the shareholding stake in that fund. There are hundreds types of funds. Funds that invest in baskets of securities, funds that tend to replicate an index or set of indices, funds managed passively or actively, including the well-known hedge funds.
The distinctions that can be done are many. Usually many of these investment funds are hooked on savings plans or insurance policies, and are used by users who are not willing to spend time learning how to invest independently. The benefits are many in that sense, as well as the disadvantages. The main disadvantages are that the returns on the investment are often very poor, affected in many cases by the high operating costs.
In many respects, these tools are used by those who have large investment capacity and uses them to keep their capital away from inflation and gain something if things go well. In simple terms, inflation means the rising of prices of goods and services, resulting in a reduced purchasing power. Here we enter in the speculation and short selling territory, where you can earn even after the depreciation of a particular asset.
In case there will be favorable conditions, I will confirm the purchase or sale option as written, making my investment bear its fruit; if instead the conditions will be unfavorable, I will not conclude the transaction, and I will avoid the loss, but I will of course NOT recover the initial cost already paid. Within this basic operations there are a long series of advanced strategy, such as the opportunity of selling these contracts instead of buying them, but this is not the place to talk of this topics.
Upon expiration of the futures contract, the investor will benefit and gain from the difference between the purchase or sale price established with the future, and the current market price of the underlying asset of the future itself.
Obviously, if this difference is positive, there will be a gain, conversely a loss. The future underlying assets can be both real, such as commodities wheat, gold, metals, coffee, etc as well as financial. Forex is not an investment, but a market where instruments such as options or futures, in addition to the mere purchase and sale the spot market , can be used. In fact, a currency is never bought or sold individually, but is traded on the basis of the equivalent with another currency through an exchange.
Speculators invest on the fact that this exchange between the two currencies will grow or diminish. Options, Futures and the Forex market offers huge earning potential, but obviously, given the law of compensation, the risks grow hand in hand. In addition to this, the level of knowledge and experience necessary to be able to invest profitably in these areas is very considerable check out our list of the best forex trading sites for beginners.
Compared to rely on others to buy stocks, or bonds, or mutual fund shares which does not require time to be learnt , to act personally in these areas for sure takes years of deep and intense studies. Its key feature is the fact that it stays halfway between the two main categories seen so far: on one hand the simple acquisition of shares, bonds or fund and the passive waiting for revenues on the other hand the retail speculation, with a higher risk index, on the forex or stock market, with futures and options or spot.
Thanks to specialized platforms, the investor can view a portfolio of market operators, called traders or Signal Providers , he can observe and compare their styles and performances, and, if interested, he can choose to connect his account to one or more of these traders. Once the favorite traders have been chosen, the investor can leave his money to work and periodically perform control operations on his investment.
Earnings, compared to the amount of capital used, can be definitely higher than those of bonds and even stocks, and also the timing might be shorter. On the other hand, there is still risk, but with the proper knowledge it will certainly be much lower than the retail Forex speculation, since the investor relies on traders who have already proven to be profitable. We will see in detail the potential of this new form of investment in the dedicated course. But for now, do not rush, and first terminates this course, because here you will find the most important concepts for the success in any investment, including, of course, with Social Trading.
The Time Factor in an investment When we think about the different investment instruments and the investment practice in general, one of the factor that very often discourages most people is undoubtedly time. Hardly ever we have found what we hoped for, in fact many of our desires and our aspirations are often left unfinished.
Just think about that time when we tried to study a foreign language with one of those courses that promised to make us learn it in 24 hours, without any effort, just by listening to the tapes. Then when we found out that instead, to really learn it, it was required a serious study and especially a lot of practice, we immediately abandoned our purposes. This is what most people does. The time needed for the investments Some, instead, behave differently. Some dwell on the first technique, or even better, they take some time at the beginning to find a technique that seems worthy, professional, suited to their way of being.
At that point, they remain focused only on that, and they give themselves the right time to learn it, knowing that every day, spending even just a few minutes, they will become more and more masters of this new discipline. These people give themselves time, and they also give time to the technique to make sure it expresses the results.
When you invest is exactly the same thing. You must have clear in mind that, once you start, you have to leave enough time to your money to work with that strategy. Many make the mistake at that point of not giving time for the strategy to accomplish its cycle. Too bad for those who had left before it was realized. When also will power is missing The time factor is also the reason why many prefer to entrust their money to other investors, so that the latters will make the choices for them.
As recent history has taught us, these people have given control of their money to other people, they trusted them, and this trust, unfortunately, has not been repaid. And that is when they get bad surprises. In your opinion, a company that has strong interests in construction companies, will not use your money to invest in buildings? If they would have done so decades ago it would have been a bargain. But if they still continued to do so while the housing bubble was bursting, the story would have been different.
That would not have been reasonable expectation, but only personal interest. Linked to the time factor, there are also the expectations on how much and how quickly you want to earn. Even here the situation is simple, ie, to make your money work intelligently and as safe as possible, it takes the right time and the right approach.
As you have seen, the right time is needed for your investment to make its cycle and demonstrate that reasonable expectation. The right setting of your strategy is fundamental to allow your fund to survive in any circumstance, to resist in the negative situation, and to have always the strength to start again. If your intent is to double or triple your capital in a few months, I assure you that, within a few months or even less, like a few weeks, your account will be halved, if not burned completely.
To find out if a gain percentage in a short time is too exaggerated, try to convert it into a loss, and ask yourself if you can accept it. I mean you must be able to access the data of all it has done for at least one year, with the help of special tools that can make it easy to read them. And if you have 2 or 3 years, even better. Of course, there may be exceptions, but these are good starting points.
In normal cases, if the conditions that have led you to make a certain kind of choices remain valid, then you have to leave enough time for your investment to work, and a year is usually the right time to be able to draw your own conclusions. Then, there is the time you have to give yourself to learn this new discipline. On this factor, now you have an edge because we have created a complete path to show you how to invest with this new opportunity called Social Trading.
But please, do not jump immediately ahead, remember this lesson, give yourself the time to read all of the courses, at least once, but even better if you read them twice. Metabolize all the concepts. Then start. If you make one accurate step at a time, you will arrive straight and precisely to hit your goal.
Those instead who run in a disorderly way and jump the steps, they are more likely to miss completely the target. Do you know that it would take me at least 2 years to invest and get the result I want? How to set a proper investment goal for you Knowing how to set a goal is something very powerful for an individual psychology.
However, doing it right is not so obvious, and it requires good analytical skills, but not of external factors as you might think. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle. When you invest, there are the goal you want to achieve, and the related risks.
Knowing the risks associated with the achievement of a specific goal is really the starting point for a good investment. It would not make sense to start any activity without first having established what would be the risks. To continue without knowing them can easily turn into irresponsibility.
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