Spelling Assume (Ass-u-me)

On a personal note I just got my Economics grade back and thankfully I passed with 83%. One less thing to stress about!

I'm sure you've all heard the cute saying that "Assuming makes an ass out of you and me". While I think this is a great way to remember how to spell the word, it is not all that helpful in life. Sure, wrong assumptions can be embarrassing, but you couldn't get through the day without assumptions. You assume the power is still going to be on at work, that you still have a job, and so forth. Webster defines assume as "to take as granted or true".

I think speculate is another one of those words that has gotten a bad wrap. Speculating in investments is considered a no-no by many investors. In fact the latest CMHC rules were done in part to try to reduce the amount of speculating in the housing market. So what does it really mean to speculate? Webster defines this as "to assume a business risk in the hope of gain". Notice the word assume in the definition.

So just like you can't make it through the day without some assumptions, you can't invest without speculation. After all you wouldn't start a business that you speculated would fail. You wouldn't invest in a stock unless you assumed it was going to increase in value.

So why has speculation received such a bad reputation? It has to do with how it is used. Some investors invest all of their available funds on a risky speculation. Buying a condo before it is finished with funds that they can't afford to have tied up for long periods of time and can't afford to lose. This can be a profitable venture, but what happens if the market slows before the building is finished? What happens if the project is delayed? Really, it is bad assumptions and risky speculation that are the problem, but they've both been thrown around in generalities.

The reason this came up is I'm getting ready to start investing for my retirement. While I was thinking of some ideas, I began to worry that I was speculating too much. I have always been frustrated with how assume is misused, so it didn't take long for me to draw that connection. Now that I have that clear in my head, it is time for me to continue to speculate. Hopefully I'll have something to share next month.

I think it is necessary to research your investments and have at least a semi-active role. Do not be so concerned about wording, but make sure you're comfortable with the investments and are prepared if things do not go quite as planned. I would love to get into real estate, but I know I do not have the funds to make that happen right now. I will probably be looking at RRSPs or TFSA for now.

Anyone have any speculating experiences? Any investing ideas to throw to the pile? How about just an experience with people misusing the English language?