Investing is the process of investing funds (capital) in order to obtain benefits in the form of profit. Are investments safe? It’s hard to say that it’s safe; we can compare them with lending.
Comparison with lending
The difference between investing and lending is that in the latter case, we know that the money will come back to us with a certain percentage on time, but we cannot say so about investments. The fact is that this is a risky type of activity, profit depends on the success of a project, in case of unsuccessful investment, a complete or partial loss of invested capital is possible.
Investments - what is it?
Let us think logically what needs to be done in order to make money. Many for this purpose find work and spend their time and energy there, receiving wages. In such a situation, what should be done in order to receive more? It is logical that for this purpose you will have to work harder (qualitatively or quantitatively). Thus, a lot of time is spent on work, and there is always a limit to human forces. If you constantly work, there will be no time for rest, and improving your financial condition will cease to make sense. In this situation, investments come to the rescue. That this is a wonderful way to make money work for yourself, and not vice versa, there is simply no doubt about it. Truth is said, laziness is the engine of progress. There is no need to work hard and hard. While you are busy with your household chores, deceiving the law of physics, which states that one body cannot be in two different places at the same time, you can still earn, though not quite you, and the “deputy” is invested capital. Slightly understood the meaning of the word "investment". What is this, now we know, because we can pay attention to the main point, namely - where, in fact, to invest money.
Types of investments
You need to invest in something. There are a huge number of options in the world where people invest their savings. Now funds, bonds, stocks are popular, real estate investments are very profitable. This is only a small part of where you can invest. And if you are good at something, then an investment in a business can be a great option. It's not about where you will invest, the main thing is that it is profitable. Money should work for you.
Stocks
A stock is a type of securities, certifies the right to a share of its owner (shareholder) in the ownership of the company and makes it possible to manage it and receive dividends (income).
Bonds
The bond fixes the debt obligations of the company to the owner of the paper. A bond holder, unlike a shareholder, does not manage the company and does not have the right to receive dividends from its profits. The owners of this security are paid interest income, and at the end of the maturity or at maturity, a nominal value is issued.
Risk comparison
Stocks are a riskier investment than bonds, since dividends depend only on the successful development of the company. The bonds are secured by the asset and property of the enterprise.
Investment funds
For a simpler understanding of the topic, imagine funds in the form of a bag of money, which is filled from legal or private individuals. Capital investments are transferred to the trust management of the bank, which manages the process of investing in bonds or shares. Investors themselves cannot invest directly because of the complexity of the work and the high cost of the sale process. I would like to note that these are rather long-term deposits, despite the fact that the investor can withdraw money at any time. You usually get profit no earlier than after 2 years, also do not forget that this is a risky business, and as a result, you can completely lose your savings.
Is it worth investing in a business?
In order to answer the question, you need to understand that by investing in a business, you get a certain percentage of its profit. It is also worth noting that you can invest both in your own and in someone else's business. Thus, even if you do not have any ideas for starting your own business, you can invest in someone else's. Money can be invested both in a ready-made business, and make investments in business projects. These are the so-called startups. The funds invested in such projects are venture capital investments. What it is? This is the name of the funds that are invested in young risk projects, usually banks refuse to cooperate with them, therefore private investors are attracted. Typically, a process is characterized by long-term investment in a company. Revenue generation may also vary. Some investors receive only passive income (percent of profits), while others receive active income (they directly manage the business). Do not worry if you do not have the full amount to contribute to the business, because you can give not 100%, but for example 20-30% and join other investors (equity participation). In general, 100% investing in a business is a very risky business, it is much safer to share. Investing in a business has both a number of advantages and disadvantages.
Benefits
- Many forms and types of business that you can invest in.
- There are projects that do not require large funds, as well as equity participation.
- It is clear and accessible to almost everyone.
- This is a tangible asset, the tangibility of invested money.
- You can take a personal part in building a business, know exactly where and how the money is spent. Ability to control investments.
- Unlimited profitability.
disadvantages
- The risk of loss of capital if the business “burns out”.
- Constantly ensure that the law is not violated.
- Disagreements with partners are possible (in case of shared business building).
- It is necessary to understand the specifics of the case in which they invested.
- When investing in a startup, most likely, the profit will not be right away. That is, this type of investment can be attributed to long-term.
The property
Perhaps this is one of the safest types of investments. Real estate never falls in price, every year it only rises in price. Real estate investments have a significant minus, which consists in the fact that you need to have an impressive start-up capital right away. But now you can find another way out of this situation, for example, take a mortgage for construction or a loan, and after the apartment is built, its value will increase in price. Also beneficial is the construction and resale of garages. Do not forget to take into account the specifics of the market in your region. You can also rent both housing and garages. In this case, the location of the facility should be taken into account, and income will depend on this. If you decide to invest money specifically in this type of investment, then carefully study the legislation, this will help in deciding on the profitability of the project. Real estate investment is the best type of investment.
We hope that the article helped to understand a little in the complex world of investments, and most importantly, made it clear that they can be a means of obtaining additional, and sometimes even basic income. It does not matter what type of investment you choose for yourself, the main thing is to learn how to make money work for you, and not vice versa. Successful, reliable and profitable investments.