"Investment is traditionally defined as the 'commitment of resources to achieve later benefits'."
The process of using money to make more money, such as through stocks, bonds, or real estate.
Asset Classes: Understanding the different types of assets such as stocks, bonds, mutual funds, and real estate.
Investment Goals: Identifying personal investment goals and creating a strategy to achieve them.
Risk: Understanding and managing different types of investment risks such as market risk, credit risk, and liquidity risk.
Diversification: Learning how to create a diversified investment portfolio to minimize risk.
Investment Vehicle: Understanding different types of investment vehicles such as individual accounts, retirement accounts, and college savings accounts.
Financial Planning: Building a financial plan to achieve long-term investment goals.
Investment Taxes: Understanding tax implications for different investment types and developing strategies to minimize tax liabilities.
Investment Options and Strategies: Researching and understanding different investment options and strategies such as value investing, growth investing, and income investing.
Portfolio Management: Evaluating and managing investment portfolio performance and making portfolio adjustments when necessary.
Investment Research: Learning how to research different investments and use financial tools to make informed investment decisions.
Stocks: When you buy shares of a publicly traded company, you are investing in its future growth potential. Stock investments can offer high returns, but they can also be volatile and risky.
Bonds: Investing in bonds means lending money to an organization, such as a business or government, in exchange for regular interest payments and the return of your initial investment when the bond matures.
Mutual Funds: A mutual fund pools money from many different investors to purchase a diversified portfolio of stocks, bonds, or other securities. By investing in a mutual fund, you can benefit from professional management and a more diversified portfolio than you might otherwise be able to manage on your own.
Exchange-Traded Funds (ETFs): ETFs are similar to mutual funds in that they provide investors with a diversified portfolio of stocks, bonds, or other securities. However, they are traded on stock exchanges like individual stocks, making them more flexible and allowing investors to trade them throughout the day.
Real Estate: Investing in real estate means buying property, such as a rental property or a commercial building, with the intention of generating income through rent or appreciation in property value.
Alternative Investments: Alternative investments are any investments that fall outside of traditional stocks, bonds, and real estate. Examples include commodities, art, and collectibles.
Certificates of Deposit (CDs): Certificates of Deposit are issued by banks and offer a relatively low-risk way to invest money. In exchange for locking up your money for a set period of time, typically ranging from a few months to several years, you can earn a guaranteed rate of return.
Retirement Accounts: Retirement accounts, such as 401(k)s and IRAs, offer tax-advantaged ways to save for retirement. By investing in these accounts, you can benefit from compound interest and potentially reduce your tax bill.
Cryptocurrencies: Cryptocurrencies are digital assets that use encryption techniques to regulate their creation and transfer, and operate independently of a central bank. They are a relatively new and increasingly popular investment option, but they are also highly volatile and risky.
"If an investment involves money, then it can be defined as a 'commitment of money to receive more money later'."
"An investment can be defined as 'to tailor the pattern of expenditure and receipt of resources to optimize the desirable patterns of these flows'."
"The net monetary receipt in a time period is termed as cash flow."
"Money received in a series of several time periods is termed as a cash flow stream."
"The purpose of investing is to generate a return from the invested asset."
"The return may consist of a gain (profit) or a loss realized from the sale of a property or an investment, unrealized capital appreciation (or depreciation), or investment income such as dividends, interest, or rental income, or a combination of capital gain and income."
"Investors generally expect higher returns from riskier investments."
"When a low-risk investment is made, the return is also generally low. Similarly, high risk comes with a chance of high losses."
"Investors, particularly novices, are often advised to diversify their portfolio."
"Diversification has the statistical effect of reducing overall risk."