The risk is given by the uncertainty and we will refer to it as the probability of occurrence of any adverse event.

When an investor decides to invest their money in any investment vehicle he takes the risk that things do not go as planned as a result of a variety of causes. Therefore the risk involves different classifications such as: market risks, natural hazard risks, financial risks, strategic risks for bad business decisions, etc. Whatever we do, the risk exists and is part of an investor tasks to analyze and study the probability of risk, to minimize it, avoid it or have a contingency plan.

On the other hand we have the profitability, which we define as income or gain received on an investment plus (or minus) any change in the market price. Profitability is determined according to the type of investment that is carried out.

Based on these two terms there is a major financial law that must be taken into account when investing:

“If the risk is high, the profitability should be higher too”

If we are medium risk investors, then we’ll get medium risks and therefore our profitability will also be medium. If we are investors who have achieved high returns it was because we took high risks.

This is one of the most important analyses that an investor should make. I suggest you do more research on this topic, however in the future we will be posting more about this.

Ok, this may be extensive but let’s talk about a few important points:

- An entrepreneur starts a business with the idea of staying in it until the end that is either a success or a failure. An investor enters into a business with the idea of leaving in the best of it and migrates to another investment opportunity.

- An entrepreneur follows a business plan. An investor follows an investment plan or financial plan.

- An entrepreneur will have revenue and earnings from his work as an entrepreneur. An investor will get revenues and profits from money invested (money working for him).

- Generally, if the business of an entrepreneur goes in bankruptcy and closes, the entrepreneur will lose much more than what an investor loses if one of their investment goes wrong (because of his diversify portfolio)

Make clear that many entrepreneurs end up being investors and many investors are also entrepreneurs. These are things that are very linked, but not exactly the same (as we saw before).

Note (and there are many examples of this) that entrepreneurs can become very successful, and if your way of life is more tied to this field then this is what you should look for: to be a successful businessman. If on the contrary you see the world from an investor point of view, then you should be a successful investor. Either way, as a successful businessman it’s likely that you become, eventually, in an investor.

Let’s begin our journey to become successful investors!

Let’s be a little conceptual at this post in order to explain the meaning of invest. In parallel, it is good that everyone meditate on what it is to invest for yourself, what priority does it have in your life? What do you want to achieve as investors, how do you imagine your life as investors? Etc.

In conclusion, we’ll have a conceptual meaning on investment and a personal meaning of what it means to everyone of us.

Let us then analyze the conceptual meaning of investing…

Investing is a process by which a person (whether natural or legal) uses own funds or funds from third parties to acquire or produce goods in order to generate more income or gains in the future according to the type of investment he chooses.

An investor buys with his money or with the money of others goods to achieve certain gains or income (profitability).

As an investor you should take into account, among others, two important factors: the profitability and the risk, of which we will talk in the future.

Investing is more than just putting your money in an investment fund or participate in the family business (or a friend’s business). Invest means to analyze, build your entries and your exits, making issues, know the market, know the business, meet people, the environment (political, economic and social), etc, etc, and what’s more, you should take into account the personal qualities that should be developed as negotiation, leadership, consistency, etc. Invest is not an easy task, but without a doubt is something that will provide great personal satisfaction.

Think well on the meaning of investment in your lives, this is the beginning of your mental programming and your life as a successful investor.