Most people want to grow their wealth. Many believe investing is a good way to do so, and they're right.
The problem is many people don't understand what investing is. I came to that unscientific conclusion after a conversation this weekend with a Money Corner reader who had questions about everything from insurance to credit cards. Her most telling questions, though, were about investing: how to get started and isn't that really risky anyway?
The second question illustrates how a large number of people think about one of the most basic ways to put their money to work for them. Most young people who talk to me me about investing do so in terms that show they view the capital markets more like casinos than places where careful thought goes into making long-term decisions that mitigate risk. Many have actually said to me that they don't see a difference between playing the lottery and contributing to their 401(k)s or buying shares of companies they regularly patronize.
That's a scary and dangerous line of thinking, since in effect it helps keep people on the sidelines and in the case of most young people, that happens at a critical time because their youth puts long-term investing principles like compound interest and dividend reinvestment in their favor.
So I'm curious. If you were given a test with one question on it: "What's your definition of investing?", how would you answer it?
After I get a few answers from readers, I'll post my own personal definition.