InvestmentWhat Exactly is an Investment? by Chhavi Madaan January 28, 2022 by Chhavi Madaan January 28, 2022 164 viewsTable of ContentsWhen it comes to investments, there are a lot of things that can go wrong if you’re not careful. Many people think that any kind of investment is automatically safe and profitable, but this isn’t always the case. In order to make the most out of your investment, you need to know what it is and how it works. In this blog post, we’ll explore what an investment actually is and how you can make sure that you’re making smart choices when it comes to your money.What is an investment?Investment is defined as an asset or resource that is purchased with the hope of future returns. These can be tangible assets, such as property, precious metals, etc., but they are also stocks and various securities in investment funds which are intangible in nature.The financial goal of an investment is to earn a profit on it. This means that the initial amount was put in and after a certain duration, there is a return. The hope is that this return would be more than what was spent on it for it to become an investment.Different types of InvestmentShort term investments are those where money is invested for a short duration of time. This could be a few days, months or years. The longer the term, the riskier it becomes as there is no guarantee that an investment will work out. Short term investments also include trading in equity and commodity markets where returns are quick due to fluctuations in their values constantly.Long Term Investments Long term investments are those where money is invested for a longer duration of time, at least a year. These may include buying shares in a company, which would not give immediate returns but along with the growth of the company’s value would be beneficial over a period of timeIn both types of investment, it is important to plan out how long you will invest for. This also defines the risk you will have to take in order to be successful.Types of InvestmentsThere are a number of potential investments which can give you a good return for your money. Some of the most common types of investment are:SharesShares – also known as equities or stocks, these give you a share in the ownership of a company and its profits. Over time they usually produce good returns, though there is always some risk.BondsBonds – these are loans to companies or governments, and the returns you get are usually affected by interest rates. If interest rates rise, your bonds will pay a smaller amount when they mature. There also tends to be less risk with bonds than with shares, though there is no guarantee so if the company does go bust you may lose your money.PropertyProperty – buying property to rent out for income is an investment, but it can also be used as another way of saving for the future by buying a house in order to live in later. Property normally provides good long term returns, though there is always some risk that prices will fall or you won’t get the right tenant.Cash DepositsCash deposits – you can earn a low rate of interest on cash in a bank account, or by buying savings certificates. However, the returns are normally small, and the rates may change over time. Some banks also charge penalties if you want to take money out early.Gold/SilverGold/Silver – Gold and silver prices have rallied strongly in recent years, but there is no guarantee they will do so again in the future.CommoditiesCommodity prices have fallen back sharply in recent years. However, if you’re prepared to invest for the longer term then they can be a good way of diversifying your portfolio and investing in specific areas of the economy. Some commodities such as oil and agricultural products are priced in US Dollars, whilst others such as gold and silver are priced in US Dollars or Euros.CollectiblesCollectibles – you can invest money in things such as art, vintage cars, stamps and antiques for a return which is highly dependent on what the market rates are at the time.Investment FAQ’s Is investing the same as saving?Investing and saving are different. With investing, your money is used to create capital which can generate returns through income or growth. Saving is simply putting your money away so it will still be there later. How do I choose an investment strategy?When choosing an investment strategy, you need to think about why you are investing. If you want to save money for the future, an easy way to do this is by putting it in a building society or bank account so that your money will earn interest. When choosing how long you want to invest for, this will help determine what type of investment is right for you. Is now a good time to invest?There are no good or bad times to invest, but you need to make sure you are prepared for the risk. If you are investing in shares there is always some degree of risk involved although this can be reduced by diversifying your portfolio. What is the best way to start investing?The best way to start investing is to take advice from an independent financial advisor. This way you can learn more about the different types of investments and how to start investing for your future. I don't have a lot of money to invest, should I just forget it?Even small amounts of money invested over time will grow and provide you with a return through either income or growth.ConclusionThere are a number of potential investments which can give you a good return for your money. Some of the most common types of investment are: Shares – also known as equities or stocks, these give you a share in the ownership of a company and its profits. Over time they usually produce good returns, though there is always some risk. Investment Share 0 FacebookTwitterWhatsapp Chhavi Madaan previous post What is Organizational Behavior? next post What are 3 Good Investments? You may also like Why is Checking your CIBIL Score Important? May 22, 2023 Effects of Bad CIBIL Score May 22, 2023 Reasons To Invest Your Money in the Blockchain Market May 20, 2022 Why Is MRF’s Share Price So high? May 20, 2022 How Lenskart Stepped Up Inventory Management Game To Prosper And... May 15, 2022 Lenskart Startup Story : Leading eCommerce Portal for Eyes May 14, 2022