Investment
Investment is the allocation of resources, usually in the form of money, with the expectation of generating an income or profit. The term "investment" can refer to any mechanism used for generating future income. This includes the purchase of bonds, stocks, or real estate property, among other examples. An investment always concerns the outlay of some asset today—time, money, effort, etc.—in hopes of a greater payoff in the future than what was originally put in.
Types of Investments[edit | edit source]
Investments can be divided into several different categories. Some of the most common types of investments include:
- Stocks: These are investments in a particular company's equity. When you buy a company's stock, you're purchasing a piece of that company.
- Bonds: These are essentially loans to a corporation or government entity, which they pay back with interest.
- Mutual Funds: These are investment vehicles that allow you to invest in a diversified portfolio of stocks, bonds, or other securities.
- Real Estate: This involves investing in property, either through buying and holding, or through a real estate investment trust (REIT).
- Commodities: These are physical assets like gold, oil, or agricultural products.
Investment Strategies[edit | edit source]
There are several different strategies that investors can use, including:
- Value Investing: This strategy involves buying stocks that appear to be underpriced by the market.
- Income Investing: This strategy focuses on buying securities that pay out regular income.
- Growth Investing: This strategy focuses on investing in fast-growing companies.
- Socially Responsible Investing: This strategy involves investing in companies that align with the investor's personal values.
Risks and Returns[edit | edit source]
All investments come with a certain level of risk, which is the possibility that the actual return on an investment will be different from its expected return. This includes the possibility of losing some or all of the original investment.
See Also[edit | edit source]
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