What is An INVESTMENT?
Investment is essentially an asset (a useful or valuable thing) that is created to allow money to grow.
When an individual purchase a good as an investment, the intent is not to consume the good but rather to use it in the future to create wealth.
An investment always concerns the outlay of some capital today—time, effort, money, or an asset—in hopes of a greater payoff in the future than what was originally put in.
The wealth created can be used for a variety of objectives such as meeting shortages in income, saving up for retirement, or fulfilling certain specific obligations such as repayment of loans, payment of tuition fees, or purchase of other assets.
An investor may purchase a monetary asset now with the idea that the asset will provide income in the future or will later be sold at a higher price for a profit.
What is An INVESTING?
Investing is a way to potentially increase the amount of money you have. The goal is to buy financial products, also called investments, and hopefully sell them at a higher price than what you initially paid. Investments are things like stocks, bonds, mutual funds, and annuities.
Difference between SAVING & INVESTING:
The difference between savings and investment is that,
Saving is often deposited into a bank savings account or a fixed deposit.
On the other hand, investing involves buying assets such as real estate, gold, stocks, or shares in mutual funds that have the potential to increase in value over time.
In Simple words, Savings refers to Collecting or save money.
And on the other hand, Investing refers to Growing money.
Types of INVESTMENT:
While the universe of investments is a vast one, here are the most common types of investment
A stock is a type of investment that represents an ownership share in a company. Investors buy stocks that they think will go up in value over time. … A stock is an investment. When you purchase a company’s stock, you’re purchasing a small piece of that company, called a share.
In simple terms, a bond is a loan from an investor to a borrower such as a company or government. The borrower uses the money to fund its operations, and the investor receives interest on the investment. The market value of a bond can change over time.
A bond is a fixed-income instrument, which is one of the three main asset classes or groups of similar investments, frequently used in investing.
“Stock fund” and “equity fund” describe a type of investment company ( mutual fund, exchange-traded fund, closed-end fund, unit investment trust (UIT)) that invests primarily in stocks or “equities” (as contrasted with “bonds”). The types of stocks in which a stock fund will invest will depend upon the fund’s investment objectives, policies, and strategies. For example, one stock fund may invest in most established, “blue chip” companies that pay regular dividends. Another stock fund may invest in newer, technology companies that pay no dividends but that may have more potential for growth. Another type of stock fund—an index fund—invests in stocks of companies contained in a particular market index. (There are also index funds that invest in bond indices.)
- Real Estate
You can invest in real estate by buying a home, building, or piece of land. Real estate investments vary in risk level and are subject to a wide variety of factors, such as economic cycles, crime rates, public school ratings, and local government stability.
People looking to invest in real estate without having to own or manage real estate directly might consider buying shares of a real estate investment trust (REIT). REITs are companies that use real estate to generate income for shareholders. Traditionally, they pay higher dividends than many other assets, like stocks.
Commodities are agricultural products, energy products, and metals, including precious metals (such as GOLD). These assets are generally the raw materials used by industry, and their prices depend on market demand. For example, if a flood impacts the supply of wheat, the price of wheat might increase due to scarcity.
Buying “physical” commodities mean holding quantities of oil, wheat, and gold. As you might imagine, this is not how most people invest in commodities. Instead, investors buy commodities using futures and options contracts. You can also invest in commodities via other securities, like ETFs, or buying the shares of companies that produce commodities.
Commodities can be relatively high-risk investments. Futures and options investing frequently involve trading with money you borrow, amplifying your potential for losses. That’s why buying commodities is typically for more experienced investors.