INVESTMENTS

Investment is the process of risking one’s savings in the hope of a monetary gain. An investment involves the act of using a good or its money equivalent to create another good or fetch the returns of the invested amount in terms of interest or profit share. The basic purpose of an investment is to hold an asset in order to obtain recurring or capital gains.

Types of investments

• Aggressive investment: Aggressive investors invest in stock markets and business ventures. This type of investment can involve the act of investing in a real estate, renovating it and renting it out. Aggressive investment involves a greater amount of risk.
• Business management: The value of the business assets is determined after which they are used to generate revenue. Business assets can be physical, financial or intangible. Physical assets include property and machinery that is in possession of the business. Financial assets include the liquid assets of a business and the company stocks and bonds.
• Conservative investment: Conservative investors invest in cash. They put their money in investment accounts like savings, mutual funds and certificates of deposit.
• Economics: In context of economics, investment is the per unit time production of goods, which are not consumed and are rather used for production in future. Tangibles like property and intangibles such as the costs incurred in on-the-job trainings are included in this type of investment. Income and interest rates form the determinants of an investment decision. A growth in income boosts investments while a rise in the rates of interest is not conducive to greater investments as it makes borrowing money costlier.
• Finance: Investments in finance refer to the cost of capital invested in buying financial assets and securities. They include the investments made in shares, bonds and equities. Investments in the finance sector are made through banks, insurance companies and other investment schemes.
• Foreign direct investment: When a company from one country invests in another country, it is known as foreign direct investment. This investment is generally of the physical form with intent to build a factory in another country.
• Investing in gold: Investments in gold can be done through ownership or by means of certificates and shares. Here is the list of the types of investing in gold.
• Bar: Buying gold bars is one of the very traditional ways of investing in gold. It is practiced in Argentina, Austria and Switzerland where gold bars can be purchased from the major banks of these nations.
• Coins: Coins, which are priced according to their weight, are purchased in this form of investment in gold. The British gold sovereign and the Swiss Vreneli are some examples of bullion coins.
• Accounts: Swiss banks provide the customers with gold accounts, which can deal in gold transactions.
• Gold exchange-traded funds: In this scheme of investing in gold, gold can be traded on major stock exchanges.
• Spread betting: Firms in the UK offer spread betting in gold investments. Spread betting is about predicting the rise or fall in the prices of gold before investing in it.
• Investing with the mining companies: Trading in the shares of gold mining companies is one of the means of investing in gold.
• Investing in silver: Investing in silver is similar to investing in gold. The various ways in which one can invest in silver are same as those for gold investments.
• Land investment: Land investment can turn out being a long-term and rewarding investment if the purchased land is developed properly.
• Moderate investment: The investments made in cash and bonds and those which involve low or moderate amounts of risk are known as moderate investments.
• Personal finance: Personal finance includes the money that is put aside on a regular basis with an aim of saving it. Mere saving of money involves only the risk arising out of devaluation of the saved amount due to inflation. However, saving money and investing it involves the investment risks like capital loss.
• Philatelic investment: The investments made in collectible postage stamps with intent of making profits are known as philatelic investments. Rare stamps can serve as unique pieces of art and excellent collectibles. The investors dealing in stamps have chances of benefiting from the nation’s growing wealth.
• Real estate: Investment in real estate is the one made in purchasing property. Property is purchased with intent of holding or leasing. Residential real estate investment involves the process of buying other people’s houses while the investment in commercial real estate involves the purchase of a large property that can be rented to a company. Commercial real estate investment is riskier than that in residential real estate.
• Socially responsible investing: This investment strategy aims at fetching financial gains for a social cause. Investors prefer investing in practices that promote human rights, equality, environmental awareness and other social concerns.
• Stock investment: There is a rising interest for investing in stock markets. Stock investments can prove to be rewarding if share trading is done wisely.
• Value investing: It involves buying securities whose shares seem under-priced. This was a list of the different types of investments. Investment is after all the means to channelize money in order to secure one’s future.

Reference

Manali Oak (n.d.). Investment. http://www.buzzle.com/articles/types-of-investments.html