Wednesday, September 13, 2017

Investment 101: A Beginner's Guide

Are you looking for a way to make some extra money? Perhaps you want to save up for a mortgage on a larger property, treat your family to a holiday or even just plan for the future...Investment is an excellent way to do it.

What is Investment?  

Investment is the practice of putting your money into something and hoping a profitable return.

Types of Investment

There are three main types of investment you can look into:

Cash- This is the simplest form of investment, and occurs when you put your money into a savings account with your bank or building society. As the months go on you will make interest on any funds in the account.

Shares- Another popular choice, this is when you put money down to buy a stake in a company. The stock market is often a source of confusion for many, but let's explain it in simple terms. If you buy a share from a company for $13.20, and then the value of the share increases by $40 due to a successful business, you can sell your stock for a profit of $26.80 (40-13.20). This is why people watch the stock market constantly to monitor when values increase, allowing them to sell their share for a profit.

Property - Real Estate is a huge market when it comes to investment, and more people are buying into property every single day. High Return Real Estate is a great way to invest in property, and you can make money on the property by purchasing at auction, renovating for a low cost and selling on or renting the property to tenants.

What Are The Risks?

As with anything involving money, there are risks to be considered. The amount of risk depends on the type of investment you go for, but generally, no investment goes without certain risks. For example, when you store money in a savings account, interest rates can vary with inflation, which could mean you are losing out on the money.

Stocks are always a risk because you could buy a stake in a company and then the value could fall dramatically due to unforeseen circumstances, meaning you can't sell it on for a decent return.

The best way to reduce risk is not to put all of your eggs in one basket. Invest small amounts in multiple shares or properties, and you will be much less likely to lose out.

When To Start

Whatever the reason for your investment, whether it be for the short term or your retirement: it is important to make sure you have sufficient funds in the bank before you consider investing. It is, of course, all down to you and whether you are willing to take a risk or want to play it safe. Either way, hopefully, this article gave you the insight to make that decision.

Choosing what to invest in is also down to the funds you have available. Property can be a lot more costly than purchasing shares, so it may be wiser to begin there if you don't have a large volume of cash on hand.

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