Getting started with investing can be intimidating, but it doesn’t need to be. Today we’ve illustrated some of the essentials of investing using the classic story of Jack and the Beanstalk.
Jack, a boy of humble origin, is sent into town by his mother to sell the family cow for cash. Instead, he trades the cow for some magic beans. When he gets home, his mother gets angry and throws the beans out the window.
A giant beanstalk grows from it, and Jack climbs the beanstalk to find a giant and his castle filled with magical treasure. He manages to escape the giant and return home with some valuable items, including a magic hen that lays golden eggs.
Jack then chops down the beanstalk, securing a comfortable future for himself and his mother.
Jack traded his cow, a safer asset, for magic beans, a riskier investment. Jack didn’t know for sure if this was worth it, but he took the risk anyway. He didn’t go with the safer option. This is like giving up a guaranteed return, like a GIC, for something that may, or may not, grow a ton.
Lots of people, including Jack’s mother, may think Jack made a bad decision, just as many people may worry about risky investments.
You could also look at it in this way: Jack believed in the potential of the beans, and it paid off! The beans grew into a massive beanstalk, a.k.a., a big return. This is a case where taking on some risk led to a greater reward.
Jack climbs the beanstalk and finds treasure, but there is danger: the giant. This is like investing, where there are risks on the way to growth.
If Jack had just planted one bean, or expanded with other seeds, he might have had a safer journey. This ties into diversification, where you don’t put all your money into one riskier investment.
It’s all about balance. It depends on what you’re comfortable with, and when it makes sense to step out of your comfort zone.
Essentially:
Book a meeting with an Aviso Wealth financial advisor at Cambrian and get some help with your “cows” or “magic beans” today!
Mutual funds and other securities are offered through Aviso Wealth, a division of Aviso Financial Inc. Unless otherwise stated, mutual funds, other securities, and cash balances are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer that insures deposits in credit unions.
The information contained in this article was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This article is provided as a general source of information and should not be considered personal investment advice or a solicitation to buy or sell any mutual funds and other securities.
We would be happy to discuss your unique situation with you.
Our goal is to make complex topics like this one, simple.
