About Different Ways of Investing Money

Video Transcript

"Hello, my name is Mark Griffith. This is going to be a very brief introduction into different ways to invest money. The first thing you need to keep clear in your mind is whether you want to invest money so that it keeps its value or whether you want to invest money in order for it to increase in value. And that may sound very silly, but a lot of people don't distinguish those clearly, and of course you need to be aware that whatever you do, it might actually shrink in value. So a lot of people think in terms of shares, bonds, property or real estate, houses and land, and a few people think in terms of collecting things perhaps collecting art of even holding something physical, like holding gold bars. Now the chief advantage of bonds and shares is that they give you some income. So, like a share may go up or may go down in value, but much of the time if the company is healthy, it will pay you a dividend. So a good thing to think about is do you want income or are you purely speculating on the value of the object going up? If you're buying land or if you're buying a house, you can conceivably rent it out. If you're buying shares, you should get a dividend most of the time. Of course if the company is in trouble it will say that it is not paying a dividend. And you hope that it uses that money to recover and get stronger in the future pay a dividend but it might not. And if you get a bond, and you're hoping to get an income from it, if you invest in a commodity or something like collectible art, let's say you're buying rare carpets or you're buying silver ingots, you're not going to get an income off it, and you're hoping instead that it's going to go up in value by more than the other things. So just keep in mind that a range of things from safe to risky, by and large the amount of money you can make is higher with a risky kind of investment but the chances of you losing everything is also higher, and the safer the investment, let's say you move towards things like treasury bonds, government bonds, or even a deposit account at your local bank, the safer and less risky your investment, the smaller the amount of money you're going to get from it is. So it sounds fairly simple but it's good to keep those things in mind. A lot of people when they invest really just want to keep the value of their money, not lose it. And if you're thinking like that, if you're risk averse, as economists say, if you don't want to take risks, you should be at the safer end and you should be thinking in terms of things like just putting the money in a deposit account at the bank, maybe getting some treasury bonds, this kind of investment. If you're willing to take risks and you're gambling on it going up in value, go to the other end, but be aware that you are gambling. Good luck."