What investing or investment is and why should one invest?

10. 12. 2020

Investing or investment is a way of using one’s own money in order to increase their assets in the long run. Investments are something that you buy or where you invest your money to enrich your assets. If your goal is to increase your assets in the next 5 years, investing is the right answer for you.

What investing or investment is and why should one invest?

People opt for different ways to enrich money and some of the most commonly used types of investments are the following:

  • Purchase of a share – an equity security through which the shareholder becomes the owner of a certain share of the company and acquires the right to dividend and vote at the General Meeting;
  • Purchase of a bond – a debt security that brings the principal back to the investor and receives the agreed interest annually or semi-annually;
  • Purchase of real estate – investing in a physical building, either commercial or residential;
  • Mutual funds – investing in a “basket” of various financial instruments (shares, bonds, short-term securities, etc.) of a large number of investors;
  • Other alternative types of investment are also possible, such as the purchase of foreign currencies, the purchase of gold and other precious metals, the collection of works of art and antiques, etc.; the modern trend is cryptocurrencies.

The collection or basket of investments of an individual investor is called a portfolio. The number of investments in a portfolio can be small or large (diversified portfolio); Portfolio investments can be different, generate different returns, show different levels of risk and are more or less related to developments in the economy. Each investment within the portfolio represents its share and contributes to the total generated return of the portfolio.

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