Lesson One: Defining and Explaining Investing
Investing is one of the fundamental concepts in finance. No financial discussion, website or blog is complete without defining and explaining investing. I intend to write about investing in detail with reference to households and people, as a tutorial, beginning by defining and explaining investing as a phenomenon and then slowly incorporating complex topics in subsequent posts.
Definition of investment
“Investing is the concept of putting ‘surplus’ money into things like stocks, bonds, real estate, starting a new business, buying a capital asset, etc. in the hope / forecast of capital gains or continuous streams of income positive net of this use of money “.
With reference to individuals, it is generally recommended to use surplus money for investments, as there is a very fine line between investing and speculating, so investment decisions must be made with great wisdom and with proper research and analysis. The investment always carries the risk of losing the amount invested, and this loss would not be under the investor’s control, so it is always advisable to measure and investigate all the risks involved.
Investment is a concept parallel to saving, where saving is done with the intention of coping with rising inflation, investment, on the other hand, is done with the intention of obtaining income streams or having capital gains from money. invested, and also generates employment and increases. the level of production of a country. Individuals save or invest their surplus money depending on the risk they are willing to take. Risk takers prefer investing over saving.