Posts Tagged ‘investment types’

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Investments Types


2011
10.25

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Posted in trading | No Comments »

One key component of being rich is investing money. It is common knowledge that those who are wealthy tend to invest their money so it can grow. Investments let people grow their money slowly over time. So, how can you invest your money? Below are a few different securities that people can use in order to have their money multiply.

1. Stocks

Stocks are shares of a company. By buying a stock you are buying into a business. This means you profit when the company profits and lose money when the company loses money. This allows an investor to make by picking companies that they believe have a strong future.

A few companies issue high dividend paying stocks which means they pay you a percentage of their earnings. If you own enough shares of stocks you may simply be able to live off of your share of the company’s earnings.

2. Bonds

Bonds also involve investing into a company, to an extent. Instead of owning a piece of the company you control some of their debt. For example when you buy a bond then you loan a company money, you collect interest payments on that loan and when the maturity date comes around you get paid the value of that bond.

3. Commodities

Well, what are commodities? Well when an investor buys a commodity future they buy a given commodity such as Gold or water at a certain time in the future. If they do not wish to actually own the commodity they can sell it before expiration and wither make or lose money based on how the value of that commodity and the futures contract where changed.

4 ETFs

So, what is an ETF? These are investments that consists of a lot of other investments. An ETF tracks a variety of different investments depending on the ETF. For example an airline ETF may consist of the top 20 airline companies. And so investing into this ETF would be a way of getting exposure to the airline industry without having to actually go through the stocks and attempt to figure out which ones offer the best investment opportunities.

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Choosing the Right Investment Type


2010
01.29

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Choosing the Right Investment Type

In the realm of stock trading, there are two major types of investments. These are: long term and short term. Most of the traders can be divided among these two types. If you are confused about which group to join, then simply acknowledge the difference among the two types. To make a smart decision, you should know the advantages and disadvantages of both the types.

As the name suggests, the prime difference among the two is period of investment. Long term investment refers to one which is undertaken with a view to earn profit over a long term. On the other hand, short term investments yield short term gains. Short term trading also includes day trading.

Now, let’s move over to the advantages and disadvantages of both the types.

Investing for a Short-Term

High growth in a small time period is the major advantage of a short term investment. The time may vary from a day to a few months. Such an investment may be affected by a fluctuating market but it also provides more control on your investment as compared to a long term investment. You can quickly execute small trades and reap large daily profits.

But the risk involved in this type of investment is higher. Even trivial news can affect the investment. Market fluctuations can react to such news and unpredictable circumstances can arise. So, chances of making a lot of money are even with chances of losing it. All in all, short term investments have a higher risk factor attached to them.

Investing for a long term

This type of investment can yield small but definite returns over a longer period of time. This involves investing in time honored stocks which are definitely bound to grow. The pace may be slow but the risks involved are less.

The down side to long term investment is that your money takes time to mature. So, it is not available in case of an emergency. To earn substantial profit you need to invest substantial time also. Also, add to it the regular fees and market fluctuations, and long term investment becomes less attractive.

To choose an investment type, you need to weigh various aspects of your financial vision. You should know why you are investing and what outcome do you need and then choose the investment type accordingly.

If quick money is what you are looking for, then go for the short term investment type. This can solve your purpose in a shorter span. However, if you plan to save money for future or in case of retirement planning, then a long term plan would suit you. This will ensure a constant stream of revenue after a certain time.

Regardless of the decision you make, keep in mind that both the investment types have certain advantages and disadvantages. Chose the investment type according to the risk you can handle. Do not gamble with your money in the stock market. Your trades should ultimately focus on your endeavor to become financially independent.