Investment is understood differently by different people in different geographical locations.
Investment is to allocate money with the expectation of a positive benefit return in the future. According to Wikipedia.
Also, Investment is the purchase of goods that are not consumed today but are used in the future to generate affluence.
No matter what you invest and should everything go as planned, you would earn a result. Due to this you have to know what to invest but already when you search on other platforms you will be given the kinds of investment instead letting you know the types before.
Types Of Investment.
There are not many types when investment is on board but rather many kinds. Investment can be classified in three types which are the basics upon which all the kinds of investment are generated or grouped:
1. Ownership Investment
The first investment type you should know is ownership investment. It means becoming a partial owner of a firm or company or any piece of property owned by anybody. Under this type there are some kinds of the investment to which you can consider;
- Stocks.
- Growth Mutual Funds.
- Real Estate.
You can own part of a property through agreement and also buying part of the property or even all if you could to generate wealth in the future that is why should not look down upon any property that does not have value today because as time pass by and people discover new things because that is the new Ish, in the future what you thought had no value will be the valuable property you have ever owned because bitcoin had no value some fifteen years back but you can confirm yourself worth of just one bitcoin. Anytime I see the price of one bitcoin in the news I blame myself always why I did not buy even two those years back because I got introduced to it in its early stage. Thanks to whoever introduced me because even now I still earn something from there.
2. Cash Equivalent.
Cash Equivalent could be the second one to consider and with this one, they are short-term commitments with momentarily trivial cash and easily adaptable into a cash amount. A kind of it is;
Money Market Fund (MMF).
3.Lending Investments.
Yes, we all lend money and even if you do not lend money, you have lent a material object to a friend before. No, but not all kinds of lending are investment mostly if you are not getting any returns from it in the near future but lending money is a kind of investment, the risks generally are low than for many investments and consequently, the rewards are relatively modest.
Some of the kinds of are;
- Bond.
- Savings Accounts.
Yes, we all save in a way but in this opening a savings accounts at any legit bank because your money is borrowed by them to work with and for that matter you would have to earn some amount of money.
Note; All the kinds of investment will be explained further in the next blog so watch out and anticipate.
4.Factoid Investments.
These are the investments that were considered to be investment but are not. In this type of investment is the most anticipated one anyone can engage in it as you and I are doing right now, we are investing our time to. But investing your time is not an investment plan because at times it just happens and you do not record such investment to know what you could gain in returns. Some of the kinds of investments are;
- Education
- Consumer Purchases
- Time and what have you.
Benefits Of Investments
So far as you invest, you expect returns and some of these returns are;
1.Potential for long-term returns;
When you invest money, either by purchasing stocks or shares of a company or by buying mutual funds, your money turn to earning its own money. If the value of the stock or mutual fund increases, you can earn money if you sell the stock for the higher price. Also, many stocks or mutual funds pay dividends (a percentage of the company’s earnings) each quarter of the year. The dividends you earn on your investments plan often get re-invested in the company, so the amount of stock you own and the value of that stock increases.
Averagely, investing money in some companies leads to a more return than putting your money into a savings account. Many savings accounts offer interest rates around just one percent. This is not enough to keep up with the rate of inflation as it comes around three percent each year. Although there is no guaranteed rate of return when you invest, the average is around seven percent per year.
2.Saving on taxes.
Another advantage of investing your money is that it gives you a chance to reduce your taxable income. Certain retirement accounts, such as a 401k and a normal IRA allow you to deduct the amount you contribute from your income for the year. You do have to pay taxes on the amounts and their earnings in retirement. So, investing today can help you save on taxes. The amount you contribute to other retirement accounts is taxed in the year you make the contribution. But you do not have to pay tax on that amount or any earnings when you withdraw it during retirement.
3.You stay ahead of inflation.
Inflation is the ongoing rise in the cost of living over time, and it can impact on our financial wellbeing.
One way to help outpace inflation and generate positive ‘real’ returns over the longer term is by investing in assets that are not just capable of delivering higher income returns but also offer the potential for capital growth.
Challenges Encountered In Investment.
- Insufficient economic growth.
Insufficient economic growth could happen due to some government policies affecting the industry in which you have invested and as a result retarding the growth causing severe risk to you the investor which may lead to loss or low growth to your assets.
2. Information Overload
Many people looking to get involved with the stock market google around to come across the fundamentals and quickly find themselves submerged by the gauzy amount of seemingly compound and even opposing advice on the internet. Fortunately, many of the most reliable trading formats used by successful investors are quite classic. New investors may find it easier to avoid the noise and use books as an asset to begin.
Finalement
Pardon my bad French sub topic, but finally upon many advantages to which some could be added to those provided above, there quite enormous challenges and disadvantages to whom could be overcome by the advantages so after doing your thorough research towards an investment plan do not hesitate to find yourself investing in the one you find suitable because it could profit you someday.
