Investment

Investing means the act of committing money or capital with expectation of obtaining an additional income or profit. It also considers making priorities for your money. Warren Buffett, one of the greatest investors, defines investing as “… the process of laying out money now to receive more money in the future.” Investments are several types differed with risk, gain, etc. They can be stocks, bonds, interest-bearing accounts, mutual funds, derivatives, real estate, land- anything an investor believes will generate income, usually in the form of interest or rents, or become more valuable.

In economics, investment means creation of capital or goods capable of producing other goods or services.  Two main classes of investment are Fixed income investment such as bonds, fixed deposits, preference shares, and the second one Variable income investment, such as business ownership (equities), or property ownership.

There are four basic investment objectives:

1) Preservation of capital – This is the most classical investment strategy and intends only avoiding the risk of loss. Because of low risk return will be less using this strategy.  Foundation of capital preservation approach are low-yielding bonds and money market.

2) Current income – current income is the strategy focused on getting quick returns on investment. High-interest bonds and high-dividend stocks are its mainstays.

3) Current growth – the idea is to collect a range of these emerging stocks – generally shares of small companies in new businesses – in a portfolio. It’s more adventurous and riskier but not bad strategy for investor who understands the potential downside. A growth stock generally does not offer a dividend, and the entire payoff with this strategy is many multiples of the price you pay today.

4) Total Return – it is sometimes called growth-with-income. Total return investing influences in both capital appreciation – how fast the share price grows – and also dividend yield. It considers the tax implications as well for the individual investor.

Investing means the act of committing money or capital with expectation of obtaining an additional income or profit. It also considers making priorities for your money. Warren Buffett, one of the greatest investors, defines investing as “… the process of laying out money now to receive more money in the future.” Investments are several types differed with risk, gain, etc. They can be stocks, bonds, interest-bearing accounts, mutual funds, derivatives, real estate, land- anything an investor believes will generate income, usually in the form of interest or rents, or become more valuable.

In economics, investment means creation of capital or goods capable of producing other goods or services.  Two main classes of investment are Fixed income investment such as bonds, fixed deposits, preference shares, and the second one Variable income investment, such as business ownership (equities), or property ownership.

There are four basic investment objectives:

1) Preservation of capital – This is the most classical investment strategy and intends only avoiding the risk of loss. Because of low risk return will be less using this strategy.  Foundation of capital preservation approach are low-yielding bonds and money market.

2) Current income – current income is the strategy focused on getting quick returns on investment. High-interest bonds and high-dividend stocks are its mainstays.

3) Current growth – the idea is to collect a range of these emerging stocks – generally shares of small companies in new businesses – in a portfolio. It’s more adventurous and riskier but not bad strategy for investor who understands the potential downside. A growth stock generally does not offer a dividend, and the entire payoff with this strategy is many multiples of the price you pay today.

4) Total Return – it is sometimes called growth-with-income. Total return investing influences in both capital appreciation – how fast the share price grows – and also dividend yield. It considers the tax implications as well for the individual investor.