Main Categories Of Investments
To understand investment you have to know what it is all about. Investment is not only a word used in business but it is also used in the stock market and the stock exchange market. Basically to invest is to put money into an investment with the hope of a return/profit in the near future.
So, basically it is all about investments that will yield profits in the future, financial goals stated in a business investment plan. Simply put, to invest in stocks or in any other financial instrument means to buy an asset or an object with the intention of creating income in the near future from that investment, either directly or indirectly through dividends or capital gains. A well chosen investment strategy can result in high returns and can also lead to substantial wealth creation even if the initial investment amount is relatively small. This is so because the returns can be used for other important needs such as education, retirement or even paying off debts.
There are several different types of investment strategies. One of the most common forms of investment strategy is through actively managed funds or stocks, bonds and securities. These are professionally managed investment plans. This basically means that the investment managers for these types of actively managed funds or stocks create investment strategies and set aside a portion of the total capital for investments that are specifically geared towards fulfilling the financial goals of the investors. They also take into account the ups and downs of the market, current trends and changes in accounting standards. The goal of these actively managed funds or stocks is to provide investors with a secure and reliable source of income by meeting their various financial goals.
Some other forms of investments include: bond markets, commodity markets, real estate, exchange traded funds (exchange traded funds) and the private stock market. Bond markets basically means that investors buy bonds from banks, other financial institutions or even from the government at a prearranged price. The bonds that are bought are secured with a collateral. This collateral can be in the form of an income producing asset like a factory or a property or it can be in the form of the currency. Bond markets usually stabilize after an economic or financial disturbance such as a default in payment by the debtor. During these times when bond prices are expected to soar, investors usually opt for equities.
The other type of popularly used type of investment is the equities mix. In this type of investing, one buys shares of the companies or sectors that they think will grow in value. These investments usually involve long term holding of the shares as the period for which they are held is usually quite long. This type of investing involves some risk as well as one must have a good knowledge about the sectors or companies involved.
The main categories of investments are: Fixed Rate Of Interest (FROI), Discontinued Investment Securities (DISS), Short Term Investment (STTR) and Real Estate Investing. One can also choose to invest in commodity markets. A good example is real estate where you can get any land or house with the potential to become gold mines over the coming years. These investments also require a lot of research and due diligence before being invested in. Bond investing is one of the main methods for investment while stock investing is one of the more popular methods of investment.