About Different Types of Investments
Investing can result in significant profits. In today's economy, investments protect your money from inflation and other such maladies. Before investing, do plenty of research and consult with a financial specialist.
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History of
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The ideaof investing money for financial gain originated in the 11th century in the Jewish marketplace. By the middle of the 13th century, the concept had spread through much of Europe, with Venetian traders dealing in government securities. Stock exchanges were born in the 17th century in Amsterdam and are now major parts of almost every developed and developing country.
Type
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Most investments fall under three categories: stocks, bonds and mutual funds. Purchasing stocks essentially makes you a business owner, because you can vote in shareholders' meetings and are entitled to some of the profits. Bonds are generally a safer form of investment than stocks as you lend money to the government or a company. You receive your investment back, plus interest, when you cash out the bond. Mutual funds are something of a combination of the two. Other types of investments include purchasing real estate or gold in hopes that you can later resell for a profit. Additionally, you can invest in a company by loaning a set sum of money as a venture capitalist, in return for a portion of the profits.
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Features
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When you purchase stocks, bonds or mutual funds, you are issued a certificate as proof of investment. All stocks in the United States are listed and traded on stock exchanges. These include the New York Stock Exchange (NYSE), NASDAQ, Amex and other more locale exchanges. You can make purchases through a stock broker, investment banker or financial institution. Additionally, you can make investments online from websites such as eTrade and Scottrade. The value of stock rises and falls with the market, allowing you to either make a huge profit if you buy low and sell high, or take heavy losses if the opposite happens. Therefore, stocks are often very volatile investments. The more you invest, the more you stand to gain or lose.
Risk Factors
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Certain changes in the market, such as fluctuations in the interest rate, can heavily affect the investment market. A good financial adviser or stock broker can help you make decisions as to when to buy or sell.
Benefits
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If you wish to invest your money but you are not feeling adventurous, purchasing government bonds allows you to accrue interest on the money while keeping it protected from the whims of the market. A wise investment in the stock market can allow you to earn a lot of money with minimal effort, as most of the process involves investing in the right business, but keep in mind that stocks are risky.
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Resources
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