Rules of Investment Number Three

Investment basic rule number three is to keep your earned income se­cure by purchasing a security you hope converts your earned income into passive income or portfolio income.

It is time for explanation that go beyond the simple under­standing of assets and liabilities—an understanding that most people never achieve.  But this point all securities are not necessarily assets, as many people think they are.

Many average investors cannot distinguish between a security and an asset. Many people, in­cluding many professionals, do not know the difference. Many people call any security an asset.

A security is something you hope will keep your money secure. And generally, these securities are bound up tight by government regulations. And that is why the organization that watches over much of the world of investing is called the Securities and Exchange Commission, a.k.a. the SEC. You may notice that its title is not the Assets and Exchange Commission neither is it called the Securities and Guarantees Commission. The government knows that all it can do is maintain a tight set of rules and do its best to maintain order by enforcing those rules. It does not guarantee that everyone who acquires a security will make money. That is why securities are not called assets. Read more