Understanding the Mathematics of Wealth Creation
Thursday, July 8th, 2010In your algebra class in high school you learned that when you add a negative and a positive of the same value, the result is zero. However, as you study the investment world on your road to financial freedom, you will discover that things do not add up in quite the same way.
For example, if you were to invest $100,000 into the market of your choice and lost fifty-percent, the value of your investment would drop to $50,000. Then, if you gain fifty-percent, you will only be up to $75,000. In order to get back to your zero point, which is the original $100,000 investment, you would need a hundred percent gain.
The concept that you need to research is effectively calculating “loss and recovery”. In doing so, you will learn the importance of down side protection when choosing your investments. Take the time to look at your accounts and talk with a financial advisor to determine how well the assets in your portfolio correlate with the market. Think of an ideal investment portfolio as a salad with a few staple ingredients and several additional variations.
Not all wealth creation plans are created equal. Different investors have different objectives and different goals. Some are optimistic and want to maximize their gains, making as much money as possible. While other investors are skeptical and worry about the money they stand to lose.
When you have an effective plan for wealth creation and a solid understanding of the math that applies, you will be able to build the wealth that you desire. You will learn the best ways to enhance the returns on all of your investments, while keeping all risks under complete control. When it comes to creating significant wealth, the more educated you become the better. Take the time to search the Internet to find helpful websites that relate to your particular plan for financial freedom.
Sean Rasmussen
Success Communicator
Aussie Internet Marketer © 2004 – 2010



