Investment is the commitment of money to the purchase of an asset with the goal of increasing its value over time. Investment necessitates the sacrifice of a current asset, such as time, money or effort.
The goal of investing in finance is to generate a return on the invested asset. Profit or loss realized from the sale of a property or investment, unrealized capital appreciation or depreciation or income investments such as dividends, interest may constitute the return. Currency gains or losses due to changes in foreign currency exchange rates may also be included in the return. Investment is the process of exchanging income from one period of time for an asset that is expected to generate earnings in the future. Thus, current consumption is foregone in order to obtain a higher return in the future
TYPES OF INVESTMENTS
STOCKS
Stocks represent a company’s ownership or shares. When you buy a stock, you are purchasing a share of the company’s earnings and assets. This is a way for businesses to raise funds and for you to make profit from their profits
stock can be very risky and tricky. Your profits and lasses are largely deterrined by the company’s performance. If the company does well, the stock price rises and vice versa. Political and market events can also have an impact on stock prices.
BONDS
A bond is a type of investment in which you lend money to a company, government or other organization. In exchange, the bond issuer pays you interest on the borrowed money while repaying you the original amount you paid for the band
Bonds are a type of fixed-income investment. Interest is usually paid in quarterly or semi-annual installments. The total principal on the other hand is paid on the maturity date of the bond.
Bonds are generally preferred over stocks, but they can still produce lower returns. Government bonds are more secure than corporate bonds
PROPERTY
Housing, real estate and other rental properties are all included. Many people prefer this form of investment because it is tangible.
However, property investment is fraught with danger. For starters, you might not get your money’s worth. This happens when the value of a property falls. It will be difficult to sell then leaving your money hanging because you cannot physically obtain it.
