A lot of people get intimidated when they hear “investing”. As a matter of fact, there are plenty of options available and it could be difficult to find out which investment channel is perfect for you. But don’t fret, this article can provide you the necessary information you need to know to start investing. Once you made profits, you can then use the money to reinvest or to open a business like a private schools debt collection or simply for making personal expenses.
Types of Investments to Try
As mentioned earlier, there are different types of investments that you could try on. Below are few examples of it.
Stocks might just be the simplest and most popular form of investment. When you purchase stock, you are purchasing an ownership share in a company that is publicly traded. Basically, plenty of the largest companies in the world are publicly traded. In other words, you can purchase their stocks.
When buying stocks, what you want is for the price to rise. This way, you can sell your share and make profits. Of course, the risk here is when the price of that stock goes down wherein you automatically lose money.
Brokers are selling stocks to investors and you may either go for online brokerage company or work personally with a broker.
When buying bonds, you are simply lending money to a business or entity. In general, this is a government or business entity. Companies are issuing corporate bonds whereas your local government is issuing municipal bonds.
Once the bond matured or after holding it for predetermined period, you are going to earn the principal amount you’ve spent on it plus the determined interest rate on it. Rate of return for bonds normally is lower compared to stocks but the beauty of it is that, bonds have lower risks. Of course, there are risks involved and for one being is, the company you purchased the bond from may fold or the government may go to default. So those would be the things you must watch out for.
Mutual fund is simply a pool of investor’s money that’s invested largely in several companies. Mutual funds could be passively or actively managed. In the latter, the fund has a manager who chooses companies and several financial instruments to invest the money on.
These fund managers will try to beat the market by picking investments they foresee to grow in value. In terms of passively managed funds, it just tracks the major stock market index.