The Ignorant Investor

Trying to simplify the process of investing down to its bare bones, it occurred to me that there are a limited number of ways the average person can make money with a little capital:

1) You can buy an asset of some kind- a home, a painting, coins, gold bars, bare land, a patent or copyright- and either wait for it to appreciate in value or allow someone else to use it for a fee. Usually this appreciation results from the demand for the asset outstripping the supply, or because someone has figured out a way for someone to use the asset to make more money.

2) You can lend money to someone for a period of time in exchange for a fixed fee or a fee that rises and falls based on some external event, like a rise in the going rate of interest.

3) You can buy a share of someone else's business, having virtually no say over how the business is run but taking a share of the profits and having a miniscule stake in the assets the company.

4) You can use the money to set up your own business.

That's it, as far as I can see. Nothing magical or extraordinary there. Taking any one of these four routes involves risk, and people have managed to both make and lose a lot of money doing all of them.

I don't know why this is important to note. It's probably obvious to everyone but me. But I like to make lists, particularly when there's so much written about investing out there in books, websites, magazines, the newspapers. Whatever the idea is, it's just a variation of one of these four approaches, and so is unlikely to have any magical properties to turn a little money into a lot of money fast.

Unless I've missed something. Which is very possible given my ignorance.