Investment is the process of risking one's savings in the hope of monetary gain. It involves using a good or its money equivalent to create another good or fetch the returns of the invested amount as interest or profit share. The basic purpose of an investment is to hold an asset to obtain recurring or capital gains.Here are various types of investments.
Physical assets include property and machinery that is in possession of the business. Financial assets include the liquid assets of a business and the company stocks and bonds.
Conservative investors invest in cash. They put their money in investment accounts like savings, mutual funds, and certificates of deposit.
Income and interest rates form the determinants of an investment decision. A growth in income boosts investments while a rise in the rates of interest is not conducive to greater investments as it makes borrowing money costlier.
Investments in finance refer to the cost of capital invested in buying financial assets and securities. They include investments made in shares, bonds, and equities. Investments in the finance sector are made through banks, insurance companies, and other investment schemes.
Foreign Direct Investment
When a company from one country invests in another country, it is known as foreign direct investment. This investment is generally of the physical form with the intent to build a factory in another country.
Investing in Gold
Investments in gold can be done through ownership or by certificates and shares. Here is a list of the types of gold investments.
- Bar: Buying gold bars in one of the very traditional ways of investing in gold. It is practiced in Argentina, Austria, and Switzerland where gold bars can be purchased from major banks in these nations.
- Spread Betting: Firms in the UK offer spread betting in gold investments. Spread betting is about predicting the rise or fall in the prices of gold before investing in it.
- Investing with the Mining Companies: Trading in the shares of gold mining companies is one of the means of investing in gold.
The investments made in cash and bonds and those which involve low or moderate amounts of risk, are known as moderate investments.
Personal finance includes the money that is put aside on a regular basis with the aim of saving it. Mere saving of money involves only the risk arising out of devaluation of the saved amount due to inflation. However, saving money and investing it involves the investment risks like capital loss.
The investments made in collectible postage stamps with the intent of making profits are known as philatelic investments. Rare stamps can serve as unique pieces of art and excellent collectibles. Investors dealing in stamps have chances of benefiting from the nation's growing wealth.
Investment in real estate is made in buying property. Property is bought for holding or leasing. Residential real estate investment involves the process of buying other people's houses. Investment in commercial real estate is buying large property that can be rented to a company. Commercial real estate investment is riskier than residential real estate.
Socially Responsible Investing
This investment strategy aims at fetching financial gains for a social cause. Investors prefer investing in practices that promote human rights, equality, environmental awareness, and other social concerns.
It involves buying securities whose shares seem under-priced.
Investment is after all, the means to channelize money in order to secure one's future. You would definitely want to consult an efficient investment adviser for guidance on investing wisely.