"Investment is traditionally defined as the 'commitment of resources to achieve later benefits'."
Putting money into assets that can potentially grow in value over time. Examples include stocks, bonds, and real estate.
Financial Goals: Defining and setting financial goals is the first and most important step towards investing.
Risk vs Reward: Understanding the relationship between risk and reward when it comes to investing is crucial.
Asset Allocation: Diversification is important when it comes to financial investments. Proper asset allocation ensures that risks are spread across different classes of investments.
Understanding Stocks: Stocks, also known as equities or shares, represent ownership in a company. Learning about stocks is important in exploring investing options.
Mutual Funds: Mutual funds are investment vehicles that pool investors' money to purchase securities such as stocks, bonds, or other assets. Understanding the type of mutual funds and the fees associated with them is important.
Bond Investing: Bonds are investments in which an investor lends money to an entity for an agreed-upon rate of interest over a set period. Understanding the types of bonds and the risks associated is important when considering investments.
Real Estate Investing: Real estate investing can provide an opportunity to build wealth and diversify investments. Understanding the costs and benefits of investing in real estate is important.
Exchange-Traded Funds (ETFs): ETFs are investment funds made up of various assets such as stocks, bonds, or commodities. Understanding their benefits and drawbacks is important.
Retirement Planning: Investing in retirement is important to ensure a financially successful future. Understanding the different retirement investment options is important.
Tax Planning: Understanding the tax implications of your investments is important for maximizing returns and minimizing tax burden.
Compound Interest: Compound interest is interest earned on the principal amount plus any accumulated interest. Understanding how compound interest works can help maximize returns on investments.
Inflation: Understanding inflation is important, as it can eat into the returns of investments. Learning to mitigate the impact of inflation is important.
Financial Ratios: Financial ratios such as the price-to-earnings ratio and debt-to-equity ratio can help when evaluating investment opportunities.
Investor Psychology: Understanding one's own mindset and emotions when investing is important, as it can have a significant impact on investment decisions.
Market Trends: Understanding current market trends and economic conditions can help make informed investment decisions.
Stocks: Ownership in a company that represents a share of its assets and earnings.
Bonds: Fixed-income securities that are issued by corporations, municipalities, and government entities to borrow money.
Mutual Funds: Investment vehicles that pool money from multiple investors to purchase a diversified portfolio of stocks, bonds, and other securities.
Exchange-Traded Funds (ETFs): Similar to mutual funds, but traded like individual stocks on an exchange.
Real Estate: Investing in rental properties or real estate investment trusts (REITs) that own and operate income-producing real estate.
Commodities: Investing in natural resources such as gold, oil, and agricultural products.
Alternative Investments: Investments that go beyond traditional stocks, bonds, and mutual funds such as hedge funds, private equity, and venture capital.
Certificates of Deposit (CDs): Time deposit accounts offered by banks and credit unions that earn interest for a fixed term.
Money Market Funds: Short-term, highly liquid investment vehicles that invest in low-risk, short-term securities.
Cryptocurrency: Digital currencies that use encryption techniques to regulate the generation of units of currency and verify the transfer of funds.
Options: Contracts that give the buyer the right, but not the obligation, to buy or sell an underlying asset such as a stock or commodity at a predetermined price.
Derivatives: Financial products that derive their value from an underlying asset or index such as futures and options.
"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."