Investment can be defined as an act of commit capital or money to an endeavor with the expectation of getting an extra profit over and above the deposited amount. There are a number of people who have become rich by investing their money properly. However, it is not as easy as it sounds to be. It is a prerequisite to take control over finances in order to make profit through investment.
There are different types of investment strategies available to you and you need to choose the option/options that suit/suits you the best. You can have a look at the following lines that deals with different types of investment strategy.
Investing in stocks or shares: When you invest in shares or stocks, you actually buy a portion of a company’s ownership and its equity. Apart from earning profit, buying shares may also entitle you to vote at the shareholder’s meeting. The profits that you earn are referred to as dividends. However, prices of shares fluctuate on a daily basis. The only way you can make money is when the shares increase in value. Therefore, you need to be very careful while investing in stocks.
Cash investment: Cash investment is one of the most popular techniques of earning profit. It comprises of certificates of deposit, savings bank accounts and treasury bills. This type of investment pays low rate of interest and they are highly risky in times of inflation.
Investing in bonds: By purchasing a bond, you actually lend your money to a company government, which in turn give you interest on your amount along with paying bank your principal amount. One of the major advantages of investing in bonds is that it is comparatively safe in comparison to other types of investment. However, the return of investment is comparatively lower than some other forms of investment.
Mutual fund investment: A mutual fund can be described as a company that brings together a group of people and invest the total amount in stocks, bonds or other securities. Mutual funds actually profit by selling ownership shares of stock. It is an ideal option for small investors as they can get access to professionally managed diverse portfolio of bonds, which is otherwise quite impossible to create with a small capital.
Investing in forex: A number of people invest in foreign exchange, it being the largest liquid financial market in present times. This is one of those investment options which have been popularized by the advent of internet technology. Forex trading involves buying or selling a currency at a given time. However, it is advisable that you enroll yourself in a forex trading course before investing your money in foreign exchange as otherwise you may lose huge amount of money if you don’t have the required knowledge.
Investing in secured debt: Debt securities provide you with returns in the form of fixed periodic payments and the capital appreciation upon maturity. It is one of the safest types of investments; however, returns are also lower than some other securities. Sometimes, you may need to take help of lawsuit to recover your invested amount if the borrower defaults on loan repayment.
Real estate investment: Real estate investment involves quite a long term commitment of funds. Profit is generated through lease or rental income along with capital appreciation. However, you can expect profit by investing both in commercial and residential real estates.