Our good friends at Merriam Webster have defined investment as the “outlay of money for income or profit”. But socially speaking, we all think “money”, when we hear the word “investment”, so let’s talk money and finance. If you don’t get it, this is your basic advice into financial investments.
Investments 101
According to Cheryl Emvula of Catalyst Investment Managers (speaking in his personal capacity, of course), it is important to know what you’re venturing into and be realistic about expected returns. Investments and money, in general, are very sensitive aspects of the financial world.
That being said, certain sectors are very tricky. Make sure you have done your research and are aware of the potential risks involved, the strategies for success in that field and the ways to maximize earnings.
How Financially Stable Should You Be Before You Can Invest?.
“If you have the money, INVEST”, says Investment Analyst Cheryl Emvula.
Basically, there is no recipe to it. The formula is ability equals you should. And while we’re here, there is no such thing as “the best sector to invest into”, because each sector bears its risks and pros, and as the saying goes, “there can be no comparison between the sun and the moon, for each has a different kind of beauty”. The relevance of this is that the variances of these sectors are too drastic to make comparisons into, because there will be success and failure in each sector, as well as the consideration of different strategies applicable. Just pick your poison.
Types of Investments
There are different types of investments, some of which are inclusive of Stocks, which is purchase of ownership shares in a public company.
What this basically means is that, you buy ownership of the company, and the only way to do that is to own part of its stock. The idea is that the company grows and performs well, so that the value of these shares increases and the returns are higher, or that the same shares could still be sold later for a higher price than the buying price.
Another interesting investment kind is one into bonds- no, I’m not religious like that. Bond investments are the kind issued by the government and corporations as fund raising attempts. The idea is that this is a loan granted to the corporation or government, and they pay back the loan, plus interest in instalments. The terms of agreement for this type of investments are mostly payments dates, rates and frequency, inter alia, which should tell you that a bond is basically a debt security arrangement.
Types of Bonds
Generally, there are three main types of bonds, from which others may flow, or be part of, being corporate bonds, which encompass the definition above. The second type is high-yield bonds, which have a lower credit rating, therefore offer higher returns. The final bond type is the municipal bond, which is issued by government institutions.
Bonds are easier to invest into, because they are easier to predict and they allow investors to gain back all their principle and more, should the agreement be held to term. More specific than the generalizations that are Stocks and Bonds, bank products are also a viable investment option.
Bank products are inclusive of, but not limited to Stocks, Bonds, Mutual Funds, Exchange Traded Funds (ETFs), equities, mortgages et al. By definition, bank products are basically any facilities or services related to cash management, according to law insider. People like certainty and reassurance, which is something bank product investments cater for, in that it is easy to determine how much one might potentially have, by when.
Conclusion
In the end, almost everything that involves money is an investment, from buying a pair of shoes, to starting a small business, to payments for education, but we will not be going into details on these, because who doesn’t already know about the basics?
This is, in no way an indication of lack of importance, #AllInvestmentsMatter, but we have simply chosen to put more focus and explanation on investment types that are less commonly known, so as to educate and give you knowledge of more options. With that said you could read about my other piece on budgeting, its all about knowledge after all.
In a snap back to reality, some financial analysts have warned against an oncoming economic collapse on a global scale, and advice caution when making investments of any kind during the next few years. So in as much as “ability equals you should invest”, making investments or considering the idea equals be careful.
