World 9 · Building capability

Investing & wealth building

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Principles, not picks: how investing works and how to think about it.

By the end of this world

You will understand risk, return, compounding and the main asset classes well enough to judge an investment claim yourself.

Foundations

• What investing is, and why people do it — Putting money to work in the hope of growth — and how that differs from saving. (6 min · Foundation)
• Risk, return and volatility — Higher possible returns usually come with bigger swings and bigger chances of loss. (7 min · Foundation)
• Compound growth and time horizon — Growth on top of growth is slow at first and powerful later — which is why time matters so much. (7 min · Foundation)
• Diversification: not all eggs in one basket — Spreading money across different things so that one failure cannot sink everything. (6 min · Foundation)
• Liquidity, inflation and real returns — How easily an investment becomes cash, and what is left of a return after prices rise. (6 min · Practical)

Asset classes

• The main asset classes — A map of the main kinds of thing people invest in, and what each is for. (6 min · Foundation)
• Stocks and business ownership — Owning a slice of a company — publicly traded or your own — and what that ownership really means. (7 min · Practical)
• Bonds and cash equivalents — Lending money for interest, and the safer places people park money they may need soon. (7 min · Practical)
• Funds and ETFs — Pooling money with many others to own a spread of investments at once. (7 min · Practical)
• Real estate, commodities and alternative assets — Property, raw materials and everything else — what they offer and what makes them tricky. (8 min · Practical)
• Investing for retirement — The longest time horizon most people have, and why structure and patience matter most here. (7 min · Practical)

Investor thinking

• Long-term thinking vs speculation — Owning productive things for years is a different activity from betting on short price moves. (7 min · Practical)
• Market cycles — Booms and busts repeat in shape if not in detail. Knowing that makes both easier to live through. (6 min · Practical)
• Risk tolerance and risk capacity — How much risk you can stomach and how much you can afford are two different questions. (6 min · Practical)
• Fees and taxes: the quiet costs — Small percentages taken every year compound too — against you. (6 min · Practical)
• Scams, fraud and how to judge an investment claim — The warning signs of investment fraud, and questions that test any promise of returns. (8 min · Foundation)