What is meant by Investment and Explain the different types of investment

What is Investment?

Investment is just an asset where we buy something valuable and keep it for a long time and when its value increases then we’ll sell it to earn a good profit. Investments like gold, property, land, etc. are the basic investment where most people invest their money in it for the long-term purpose, the reason behind these investments is that they all know well that there is a very very low chance that the value of property, gold, and lands will decease they always increase because there is a huge demand of these things. That’s the main reason behind these investments because they are precious. The process of getting returns/more money over a long time in any asset is basically known as “Investment”.

The thing I explained via examples on lands, properties, and gold, are basic investments. But do you know you can invest your money in many other places? No then don’t worry I am gonna tell you.

There are many types of investments are there where you can invest your money:

Types of Investments

  • Stock Investments
  • Bond Investments
  • Mutual Fund Investments
  • Public Provident Fund(PPF) Investments
  • Exchange-Traded Fund(ETF) Investments
  • Index Fund Investments
  • Real Estate Investments
  • Crypto-Currency Investments

Stock Investments

Stock investments are those types of investments where you can invest your money in any big companies like Reliances company, TATA company, Maruti Company, Birla Company, etc. and also you can invest in any banks and as well as in small companies, etc. This type of investment is known as “Stock Investment”.

Bond Investments

First, let’s see what are bonds? Bonds are just like loans for the companies where the company raises funds from the public in terms of bonds or you can say loans. It is known as “Bonds”. Now you must be thinking that the company should take a loan from the bank, then why does it take it from us and not from them? So there is a simple answer bank charges a lot of charges on interest, that’s the reason why companies don’t want to take loans from banks. they considered the public to get loans with low interest if they compared to bank interest.

So the Bond Investment is basically you can invest your money to give loans to companies in exchange for getting returns (bond investment is a good and safe investment if we compared to FD interest returns vs Bond investment interest returns).

Mutual Fund Investments

First, let’s see what is mutual funds? Mutual funds are just like a company where they pool money from the investor and invest the money in diversified stocks or we can say different stocks. Mutual fund companies help investors by reducing their risk(because direct stock investment is very risky if we compared it to mutual fund investing) and make give them good returns. These are known as “Mutual Funds”.

In mutual fund investment, you can able to invest your money in diversified stocks, where mutual funds company helps you to secure your investment. This type of investment is known as “Mutual fund Investment”.

Public Provident Fund(PPF) Investments

PPF: Public Provident Fund is one of the popular long-term investment schemes where you can invest your money risk-free and tax-free. This fund offers you a 7.1% interest rate at a compounded yearly. The minimum time to invest your money in PPF is around 15years. This type of investment is known as “PPF Investments”.

Exchange-Traded Fund(ETF) Investments

ETF: Exchange-traded fund, is a basket of stocks where it holds stocks bonds, currencies, commodities, etc. Simply, In ETF funds you can invest your money in different stocks, bonds, currencies, etc, and many others. This investment is known as “ETF Investments”.

Index Fund Investments

IF: Index Fund, This fund is very similar to ETF funds where you can invest your money to make a diversified portfolio. The word “index” refers to all the stocks which are available on a stock exchange, In simple words, all companies listed in a single place are known as an “index”. In our Indian stock exchange, there are two indexes: BSE(Bombay Stock Exchange) & NSE(National Stock Exchange).

So In Index fund investment, you can invest your money in an index(BSE &NSE). This type of investment is known as “Index fund investment”.

Real Estate Investments

Real Estate investments are those types of investments where you invest your money in Properties, lands, infrastructures, buildings, etc. This type of investment is known as “Real Estate Investment”.

Crypto-Currencies Investment

These days Crypto becomes so popular in terms of giving good returns in a short time, But it is also a very very risky investment where there is no control over the government. Now, what is crypto-currency? It is a digital currency or we can say virtual currencies are simply known as “CryptoCurrency”, These currencies are decentralized where there is no control over the government.

In CryptoCurrencies, you can invest your money in some digital coins like “Bitcoin, Ethereum, Cardano, Matic coins, etc., and in many other coins. This type of investment is known as “Crytpo-Currencies Investment”.

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