Better Investments, More Profits!
“Never Depend On Single Income, Make Profitable Investments To Create a Second Source”
Thinking About Investing Your Money? Here Is What You Need To Know Before Proceeding.
- An investment is an asset acquired with the goal of generating income or appreciation. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or will later be sold at a higher price for a profit.
Investment is important to achieve individual goal. Investment means we have money, then we need to make analysis to invest the money, and expected return in future.
- A portfolio investment is an asset that is purchased in the expectation that it will earn a return or grow in value, or both.
- A portfolio investment is passive, unlike a direct investment, which implies hands-on management.
- Risk tolerance and time horizon are key factors in selecting any portfolio investment.
Basic Investment Objectives
There is truth to the axiom that there is no such thing as a completely safe and secure investment. However, we can get close to ultimate safety for our investment funds through the purchase of government-issued securities in stable economic systems or through the purchase of corporate bonds issued by large, stable companies.
Most investors, even the most conservative-minded ones, want some level of income generation in their portfolios, even if it is just to keep up with the economy’s rate of inflation. But maximizing income return can be an overarching principle for a portfolio, particularly for individuals who require a fixed sum from their portfolio every month.
Capital growth is most closely associated with the purchase of common stock, particularly growth securities, which offer low yields but a considerable opportunity for an increase in value.
Various Types of Investments
- Investing in stocks is an excellent way to grow wealth. For long-term investors, stocks are a good investment even during periods of market volatility. Stocks are equity investments that represent legal ownership in a company. You become a part-owner of the company when you purchase shares.
- If you are thinking of investments that could beat inflation and also give you good returns, one option might be to start investing in the stock market. If you have decided to do the same and go for it all by yourself, it’s not a bad idea. The stock market, when properly understood, can help you make a lot of money, but you can also lose all your money if you are tempted to invest randomly without knowing the nitty-gritty of the market.
- A bond is a fixed income instrument that represents a loan made by an investor to a borrower.
- When you buy a bond, you’re essentially lending money to an entity. Generally, this is a business or a government entity. After the bond matures — that is, you’ve held it for a predetermined amount of time — you earn back the principal you spent on the bond, plus a determined rate of interest.
- The rate of return for bonds is typically much lower than it is for stocks, but bonds also tend to be lower risk.
- A mutual fund is a type of investment vehicle consisting of a portfolio of stocks, bonds, or other securities.
- Mutual funds give small or individual investors access to diversified, professionally managed portfolios at a low price.
- An actively managed fund has a fund manager who picks companies and other instruments in which to put investors’ money.
- Fund managers try to beat the market by choosing investments that will increase in value.
- A passively managed fund simply tracks a major stock market index like the Dow Jones Industrial Average or the S&P 500. Some mutual funds invest only in stocks, others only in bonds and some in a mixture of the two.
- Exchange-traded funds (ETFs) are similar to mutual funds in that they are a collection of investments that tracks a market index.
- Unlike mutual funds, which are purchased through a fund company, ETFs are bought and sold on the stock markets. Their price fluctuates throughout the trading day, whereas mutual funds’ value is simply the net value of your investments.
- ETFs are often recommended to new investors because they’re more diversified than individual stocks.
- You can further minimize risk by choosing an ETF that tracks a broad index.
- Investors that are looking for a safe investment and looking to preserve their capital will opt for secure investment vehicles, such as cash investments.
- Money market accounts (MMAs) and certificates of deposit (CDs) are examples of cash investments.
- Not only does it give investors precise knowledge of the interest they’ll earn, but it also guarantees they’ll get their capital back.
- Cash is king not only for investors, but also for businesses.
- Retirement planning is ideally a life-long process. You can start at any time, but it works best if you factor it into your financial planning from the beginning. That’s the best way to ensure a safe, secure—and fun—retirement.
- Retirement planning refers to financial strategies of saving, investment, and ultimately distribution of money meant to sustain one’s self during retirement.
- Many people use annuities as part of their retirement savings plan. When you buy an annuity, you purchase a contract with an insurance company and, in return, you get periodic payments. The payments may begin right away or at a specified future date.
- While annuities are fairly low risk, they aren’t high-growth. They make a good supplement to retirement savings, rather than an integral source of funding.
- A cryptocurrency is a new form of digital asset based on a network that is distributed across a large number of computers. This decentralized structure allows them to exist outside the control of governments and central authorities.
- Cryptocurrencies typically use decentralized control as opposed to centralized digital currency and central banking systems. When a cryptocurrency is minted or created prior to issuance or issued by a single issuer, it is generally considered centralized.
- When implemented with decentralized control, each cryptocurrency works through distributed ledger technology, typically a blockchain, that serves as a public financial transaction database.
- Commodities are physical products you can buy. They could be agricultural products like wheat, barley and corn, or energy products like oil, coal or solar power. Precious metals like gold and silver are some of the most common commodities.
- For investors, commodities can be an important way to diversify their portfolio beyond traditional securities
- Many investors who are interested in entering the market for a particular commodity will invest in stocks of companies that are related to a commodity in some way.