Smart Money Strategy

CHAPTER 10The Investment Strategies

Investing is different from saving. Saving is the act of putting aside some money from your income every week or month and letting it grow over time through this repeated behaviour. Investing seeks to put your savings to work to generate more income to help you achieve your ‘why’.

Investors typically have one or more of three expectations:

• That they'll receive a return (for example interest, dividends, distributions or rent) from the money invested (income)
• That their initial money invested will be returned (capital)
• At the point of sale of the investment, they will sell their investment for more than they paid for it (growth).

Income, capital and growth are the fundamental components of any investment.

Another way to look at these components of investment is through the life of an apple farmer using different Investment Strategies.

On the Strategy Stacker's Apple Farm, the apples that grow on the trees generate the income that the farm receives.

In order to grow the apples, the farm needs apple trees and other farming equipment. The farm uses capital to buy the trees. This capital is like the money you make an investment with.

Over time, the farmer decides to plant more apple trees. The value of your initial investment in the farm will show growth, because now the farm has the ability to produce more apples to sell. This makes the farm ...