What is Investment?
An investment is an asset or item accrued with the goal of generating income or recognition. In an economic outlook, an investment is the purchase of goods that are not consumed today but are used in the future to generate wealth. In finance, an investment is a financial asset bought with the idea that the asset will provide income further or will later be sold at a higher cost price for a profit.
Investing is a way to set aside money while you are busy with life and have that money work for you so that you can fully reap the rewards of your labor in the future. Investing is a means to a happier ending. Anything that potentially increases in value can be an investment.
Basic Types Of Investment :
Stocks are securities that represent an ownership share in a company. For companies, issuing stock is a way to raise money to grow and invest in their business. For investors, stocks are a way to grow their money and outpace inflation over time. If a company does well, the stock can increase in value. When you own stock in a company, you are called a shareholder because you share in the company’s profits.
Bonds are issued by governments and corporations when they want to raise money. Also known as fixed-income investments, bonds are designed to create a steady stream of income. Bonds are issued by public authorities, credit institutions, companies and supranational institutions in the primary markets. The most common process for issuing bonds is through underwriting.
Cash investment refers to the Investment in short term instruments or saving account generally for the period of 90 days or less that generally carries a low rate of interest or the return with a comparatively low rate of risk in comparison to other mode of investment. Cash investments have the lowest risk, but also the lowest return potential.
A mutual fund is a type of financial vehicle made up of a pool of money collected from many investors to invest in securities like stocks, bonds, money market instruments, and other assets. Mutual funds give small or individual investors access to professionally managed portfolios of equities, bonds, and other securities. Each shareholder, therefore, participates proportionally in the gains or losses of the fund.