INVESTING 101 : STEPS BEFORE THE COMMITMENT

BY MIKUS KINS

GIVEN THE RECENT CHANGES WITHIN THE MARKET, YOU MAY BE WONDERING WHETHER OR NOT INVESTING IN A FRIEND ’S

BUSINESS OR A STOCK OF A COMPANY IS THE BEST IDEA .

WHILE T IMING OF COURSE DOES PLAY A LARGE ROLE IN THE OVERALL RETURN, THIS FEAR AND TREPIDATION SHOULD NOT

PREVENT YOU FROM DIVERSIFYING YOUR INVESTMENT PORTFOLIO.

THE MAIN THING YOU CAN AND SHOULD DO BEFORE MAKING SUCH A COMMITMENT IS DOING YOUR HOMEWORK.

THIS ENTAILS ANALYZING AND RESEARCHING THE HISTORY AND PRESENT DAY HEALTH OF THAT

PARTICULAR F INANCIAL OPPORTUNITY.

WHEN YOU BUY STOCK OR PROPERTY, YOU ARE NOT JUST GETTING A S IMPLE P IECE OF PAPER. INSTEAD,

YOU ARE BECOMING PART OWNER OF THAT FRANCHISE .

SO WHAT IS THE HOMEWORK? WHAT DO YOU NEED TO DO BEFORE YOU INVEST AND EXPAND YOUR

F INANCIAL PORTFOLIO?

BEFORE INVESTING IN A BUSINESS , IT IS ABSOLUTELY V ITAL THAT YOU DO YOUR RESEARCH ON THE COMPANY’S

H ISTORY, TRENDS, AND CURRENT DAY STATUS.

NOW, WHAT HAPPENS IF YOU DECIDE TO GO ON A WHIM AND NOT TO DO THAT EXTRA WORK?

IN THE GRAND SCHEME OF THINGS, THE PROBABLY OF SUCCESS CAN BE SURE LUCK.

REGARDLESS OF THE WINS OR LOSES , INCREASING YOUR ODDS A WAY FROM A S IMPLE 50 -50 COIN FL IP IS , AND WILL ALWAYS BE , THE SMARTER MOVE.

THAT IS WHY I H IGHLY ENCOURAGE YOU TO ANALYZE THE OVERALL S ITUATION BEFORE MAKING ANY TYPE

OF COMMITMENT.

THE ONLY WAY THAT CAN HAPPEN STARTS BY DOING THE HOMEWORK AND UNDERSTANDING WHETHER OR

NOT THIS OPPORTUNITY IS R IGHT FOR YOU.

WARREN BUFFET ONCE SAID THAT, “NEVER TEST THE DEPTH OF A R IVER WITH BOTH OF

YOUR FEET. ”

IF THERE IS A WAY WHERE YOU CAN INCREASE YOUR ODDS FOR SUCCESS , DO IT !

SO HOW DO YOU GO ABOUT DOING YOUR RESEARCH?

START BY CREATING A PERSONAL F INANCIAL ROADMAP

THE F IRST STEP, L IKE IN ANYTHING , IS F IGURING OUT YOUR GOALS AND R ISK TOLERANCE. BE INTELL IGENT

ABOUT YOUR PLAN, BUT ALSO BE REALISTIC .

NOW WITH ANY INVESTMENT, THERE WILL ALWAYS BE SOME LEVEL OF R ISK .

ASK YOURSELF HOW MUCH YOU ARE COMFORTABLE R ISKING . MAKE IT AL IGN WITH YOUR F INANCIAL T IMELINE AND GOALS .

AFTER YOU DO THIS , BE SURE TO RESEARCH THE CHIEF EXECUTIVE OFF ICER

THE CHIEF EXECUTIVE OFF ICER IS THE MOST SENIOR CORPORATE ADMINISTRATOR OR EXECUTIVE IN

CHARGE OF MANAGING THE OVERALL ORGANIZATION.

THEY ARE THE INDIV IDUALS WHO ARE THE FACE AND LEADERSHIP BEHIND A COMPANY.

• WHAT IS EDUCATIONAL AND PROFESSIONAL HISTORY AND BACKGROUND?

• WHAT HAVE THEY DONE PRIOR TO X -COMPANY THAT MAKES THEM A STRONG LEADER?

• WHAT IS THEIR V IS ION AND GOALS FOR THE COMPANY?

• DO YOU BELIEVE IN THEIR V IS ION AND GOALS FOR THE COMPANY? WHAT IS THEIR LONG-TERM PLAN TEN TO TWENTY YEARS DOWN THE L INE?

• WHAT HAVE THEY ALREADY DONE FOR THE COMPANY? WHAT COULD THEY IMPROVE ON?

ASK VARIOUS QUESTIONS TO SEE WHETHER OR NOT YOU ARE COMFORTABLE WITH THEIR STYLE AND FUTURE

D IRECTION FOR THE COMPANY:

IN ADDIT ION, BE SURE TO REVIEW THEIR BUSINESS MODEL

A BUSINESS MODEL IS AN ABSTRACT REPRESENTATION OF A COMPANY OR ORGANIZATION.

THE OVERALL MODEL SHOULD ESSENTIALLY BREAK DOWN THE STRATEGY OF A COMPANY AND HOW THEY WILL USE IT TO

MAXIMIZE THEIR PROFIT WITHIN THEIR INDUSTRY AND F IELD.

IN COMPARISON TO EVALUATING THE CEO, WHAT YOU WANT TO PAY SPECIF IC ATTENTION TO ARE THE V IABLE TRENDS

BOTH ANNUALLY AND QUARTERLY.

BE SURE TO REVIEW THE NUMBERS (NET INCOME, REVENUE, COST, PROFIT MARGINS)

THIS NUMBER MEASURES HOW MUCH OUT OF EVERY DOLLAR OF SALES A COMPANY ACTUALLY KEEPS IN THEIR EARNINGS.

THE COST, ALSO KNOWN AS EXPENSES , OF A COMPANY IS THE VALUE OF MONEY THAT IS BE ING USED UP TO PRODUCE A BUSINESS ’S PRODUCTS AND SERVICES .

REVENUE IS S IMPLY THE RA W AMOUNT OF MONEY A COMPANY OR BUSINESS MADE FROM SALES OF ITS

PRODUCTS OR SERVICES .

AFTER YOU HAVE GAINED A HOLISTIC V IEW OF THE TWO, COMPARE BOTH NUMBERS TO GET THE ANNUAL

PROFIT MARGINS .

TO LEARN MORE ABOUT CAREER, BUSINESS , OR ENTREPRENEURSHIP,

PLEASE V IS IT THE FOLLOWING S ITES

MIKUS KINS BUSINESS & ENTREPRENEURSHIP : H T T P : / / M I K U S K I N S . C O M

MIKUS KINS PERSONAL : H T T P : / / M I K U S K I N S . N E T