What is Investing? Different Types of Investments!

 

When you think of the term investing in your future,  I’ve seen many automatically began thinking about their educational future.  Investing has lost the true meaning which is achieving a profit or material result by putting into financial shares, property or other commercial options.

There are two basic types of Investments that i’m going to cover and all the items within these investments all generate a profit!

The first is Ownership Investments – (There are investments you own fully or partially)

Your Business – This can be opening your very own YouTube account, your own a website or online retail store are all something you control and can create a product or service through which you can then sell to people who want it.  Entrepreneur’s can make a huge profit, but entrepreneurship can be one of the hardest investments to make because it requires more then just money, but time (but can offer the greatest return)

Real Estate – This can include Houses, Apartments or other properties, these you can buy to rent or buy to repair and resell as an investment. People often think of houses as investments but unless that investment is paying you it is not really an investment it’s a liability. The house you live in is filling a basic need and unless it grows in value over time it should not be purchased with profit in mind.

Stocks – When you purchase a share of a stock you own a portion of a company. If that company’s records profit, other investors are going to want shares of that company and the demand for shares will increase the worth of the company and it’s price.  Dividend Stocks work the same way only many dividend paying stocks return a % back to the shareholders this can grow overtime when reinvesting your dividend pay back into the company.

 

The second is Lending Investments: (These are investment you lend a % of your money in return for capital)

Savings bonds – These are safe investments you purchase for a set amount, normally 20-30 years that each a set amount and returns fairy. They pose a lower risk and provide a lower return than ownership Investments.

Certificate of Deposit – Your again lending your money to lock into a specific % back, this is often very low as the current average CD is  2.30% with a minmum balance of 2000.  That is a gain of ~$46 and if withdrawn early can have penalties.

Savings Accounts – This is the bottom of the barrel in “investments” you’re essentially lending money to the bank in exchange for a very SAFE, but very very low return investment.

 

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