Extreme Investing for the Adventurous In All of Us
November 5, 2007
You’ve probably heard of extreme sports, sports “perceived as having a high level of inherent danger or difficulty”. Well how about extreme investing!
I’m a pretty non-extreme investor in general; most of our money is in index funds with a small percentage in other industry specific funds. But I do like to use a small portion of our money for “extreme investing”. What exactly is extreme investing you ask? Well it really depends on the perception of the person that is risking the money.
To someone who trades stocks on a daily basis and is very comfortable with the market, making margin trades might be their version of extreme investing. On the other hand, to a person invested only in CD’s or bonds, simply buying a stock might feel a little crazy.
Why Extreme Investing?
Of course the point isn’t to get an adrenaline rush or an extreme buzz from watching your investment’s progress. The reason you might want to do a little extreme investing is that it can help broaden your financial horizons. As creatures of habit we tend to stick with what we know, whether what we’re currently doing is the best thing for our situation or not.
Extreme Investing Options
Extreme investing basically entails taking a small percentage of your financial capital and using the money to invest in something you typically wouldn’t but think could be a good opportunity for you. Maybe you’re interested in starting your own business, investing in someone else’s idea, or just trading a few shares of stock. Ideally, you’ll do research on the topic before jumping in so you can learn the risks and opportunities of what you’re getting into. The money you invest should be money you’re willing and able to lose 100% of, after all this is extreme investing : )
The cool thing about extreme investing is that once you make some money with it, you can use that capital to reinvest into training, research, or more growth with the same idea. My version of extreme investing has been dabbling in online businesses and I’ve invested the money I’ve made back into new ideas.
As I mentioned earlier, it’s important to only use a small portion of your financial assets for extreme investing, an amount you’d be willing to lose. If you lose it all don’t continue to pile your money into it. Make sure you research the investment area and understand what it is you’re putting your money into. When you make money invest it back into your venture for future growth. The last rule is to learn from your mistakes and widen your horizons!
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