WHAT IS THE 'INVESTMENT'

nvestment is traditionally defined as the "commitment of resources to achieve later benefits". If an investment involves money, then it can be defined as a "commitment of money to receive more money later". From a broader viewpoint, an investment can be defined as "to tailor the pattern of expenditure and receipt of resources to optimise the desirable patterns of these flows".Investment refers to putting your money in an asset with the aim of generating income. Financial investments come in different forms, such as mutual funds, unit linked investment plans, endowment plans, stocks, bonds and more. However, the primary goal behind all investments remains the same, i.e., to increase the value of your invested money.When you invest your money in the right way, it grows in value and provides you returns. Your investments can be used to fulfil your financial goals such as buying a house, your child’s higher education, and more. Investments also carry a risk that may vary for different investment products.

What Are the Basic Types of Investments?

There are four main asset classes that people can invest in with the hopes of enjoying appreciation: stocks, bonds, commodities and real estate. In addition to these basic securities, there are funds like mutual funds and exchange traded funds (ETFs) that buy different combinations of these assets. When you but these funds, you’re investing hundreds or thousands of individual assets.

Stocks

Companies sell stock to raise money to fund their business operations. Buying shares of stock gives you partial ownership of a company and lets you participate in its gains (and the losses). Some stocks also pay dividends, which are small regular payments of companies’ profits.
Because there are no guaranteed returns and individual companies may go out of business, stocks come with greater risk than some other investments.

Start Investing Early, Keep Investing Regularly

“Successful investors typically build wealth systematically through regular investments, such as payroll deductions at work or automatic deductions from a checking or savings account,” says Jess Emery, a spokesperson for Vanguard Funds.
Regularly investing helps you take advantage of natural market fluctuations. When you invest a consistent amount over time, you buy fewer shares when prices are high and more shares when prices are low. Over time, this may help you pay less on average per share, a principle known as dollar-cost averaging. And “[dollar-cost averaging is] unlikely to work if you are unwilling to continue investing during a downturn in the markets,” says Emery.
You also should remember that no investment is guaranteed, but calculated risks can pay off.
“Over the last 30 years, an investment in the S&P 500 would have achieved a 10% annualized return,” says Sandi Bragar, managing director at wealth management firm Aspiriant. “Missing the 25 best single days during that period would have resulted in only a 5% annualized return.” That a reminder not to sell your investments in a panic when the market goes down. It’s incredibly hard to predict when stock values will increase again, and some of the biggest days of stock market gains have followed days of large losses.Here are some of the best options based on how long you would like to invest for:
 

• Short-term
  • 32Day Notice Account – an investment account where you can withdraw the funds after a 32-day notice period. This helps to keep the investment for longer to get more interest on the investment amount.
  • Market-linked – an investment account that invests your money in the market and helps you to mitigate risk as the market changes.
  • 24-hour notice account – an investment account where you can withdraw the funds after a 24-hour notice period.
• Medium term
  • Fixed-deposit account – an investment account where you need to invest a certain amount, depending on your investment needs and cashflow.
  • Unit trust – this is a collective investment account where small investors can pool their funds for a specific purpose, ie the education of a child.
• Long term
  • Retirement annuity – an investment account that cannot be withdrawn before its maturity date to save for retirement.
  • Property investment – a long-term investment in a property or house.
  • Held to maturity investment – an investment account where you decide when you want the funds to be paid out at a later date.

Investing in Stocks for Fun and Profit

HAVE TWO TYPES

Online Brokers

Investors normally leave it to the experts and allow brokers to make the trades for them. The largest and some of the smaller brokerages offer online trading so you’ll be able to manage your account from your computer. Once an account’s open, tell your broker what type of share you’d like to put your money into and how much to invest. The broker takes a commission that works out at a few cents per share so you get their expertise at a low cost.

Buying Stocks Direct

You can miss out the broker and buy the stocks direct. There are a few well known firms that will sell their stocks directly to individual investors. These direct stock purchase plans sometimes have a very low commission or service charge that’s less expensive than a broker’s charge rate. If you’re looking to purchase a small amount of stock, this could be the way to go as you’ll maximize your investment, but there are normally restrictions on when a stock can be bought.
Examples of indirect investments are mutual funds, pension funds and 401(k) plans, explains CNN Money. They can also be REITs, which are real estate investment trusts. An REIT could use investor money to buy large commercial properties such as malls, office buildings and hotels. An example of a direct investment would be owning a house and acting as a landlord or hiring a property manager, being responsible for upkeep and taxes, keeping all of the rent collected and assuming all of the gains or losses when the property sells.