Some conservative-minded investors make the common mistake of thinking

Some conservative-minded investors make the common mistake of thinking
that they're diversifying their long-term investment money by buying several
bonds, some CDs, and an annuity.de290 The problem, however, is that all these
investments pay a relatively low fixed rate of return that's exposed to the
vagaries of inflation.
A final drawback to lending investments is that you don't share in the success
of the organization to which you lend your money. If the company doubles
or triples in size and profits, your principal and interest rate don't double or
triple in size along with it; they stay the same. Of course, such success should
ensure that you get your promised interest and principal.
You're an owner when you invest your money in an asset, such as a company
or real estate, that has the ability to de212 generate earnings or profits. Suppose
that you own 100 shares of Verizon Communications stock. With billions of
shares of stock outstanding, Verizon is a mighty big company - your 100
shares represent a tiny piece of it.
What do you get for your small slice of Verizon? As a stockholder, although
you don't get free calling, you do share in the profits of the company in the
form of annual dividends and an increase (you hope) in the stock price if the
company grows and becomes more profitable. Of course, you receive these
benefits if things are going well. If Verizon's business declines, your stock
may be worth less (or even worthless!).
Real estate is another one of my favorite financially rewarding and time-
honored ownership investments. Real estate de205 can produce profits when it's
rented out for more than the expense of owning the property or sold at a
price higher than what you paid for it. I know numerous successful real estate
investors (myself included) who have earned excellent long-term profits.