Investment is the purchasing of assets to sell them when there is an increase in its value. Investing in general requires knowledge, patience, money and effort to mention just a few. High risk investments sometimes generates higher returns than low risk investments.
For amateur investors, diversifying their portfolio may help in reducing or managing their risks.
To be a good investor, you need to learn at least some basic principles and guide to investment or hire an expert to help you invest. To invest in an asset one needs to carryout different analysis to determine his/her risk factors before investing. Investing is different from gambling or speculation since it involves time and proper research (fundamental analysis).
Is Education an Investment?
There are various arguments/debate as to whether Education is an investment or not. So, I will only state my opinion regarding the topic.
Although education has so many benefits and we invest our money, time and effort in acquiring it, it is not an investment in itself. Learning how to invest is not an investment, since you will always need knowledge or information to invest.
business
There are three types of investments;
- Ownership Investments
Ownership investment involves wide varieties of assets or things an investor may own that could be sold in the future to yield more profit. Such things includes;
Stocks
When a corporation sells fractions or parts of its asset the stock serve a security that proves the ownership of the amount of shares purchased by the individual. In order words, the individual own parts of that corporation asset. Investors buy stocks intending to sell it when it increases in the future.
businessReal Estate
Buildings/houses can be sold or purchased, rented or resold for profit. You can purchase a house and resell it to make profit in the future. You can buy a piece of land (lands appreciate) and resell it in the future to make profit.
real estateBusiness
When you start up a business, the capital used in starting and running the business and the business itself is an investment since you can generate more income from selling products to customers or even selling the business to make more profit (sounds absurd right).
business
- Rare objects/Collectibles
Rare objects or collectibles like gold, gems, diamonds, paintings, that are bought with the intention of reselling them can also serve as an investment.
diamonds
2.Lending Investments
Lending money to the government or a corporation is another form of investment since they give you a certain percent at the end of the investment. This includes lending of saving money in the banks. These are low risk kind of investments and the profits are also low (or modest).
lend
3.Cash Equivalents
These kinds of investments are as good as cash since they are very liquid and can be easily converted to cash. The money market is a place where you make short term trades with almost zero risk factors but with low returns. It is similar to a savings account and can be gotten from any bank but unlike the savings account money market funds have to be left for a considerable period so that its interest might increase.
cash
SOME FAMOUS INVESTORS INCLUDES:
Warren Buffett, Edward O. Thorp, Elon Musk, Bill Gates, George Soros, Peter Lynch, Bill Ackman, Cathie Wood, Ray Dalio, Michael Steinhardt, Mark Cuban, Toto Wolff etc.
I hope you learned some few things today, thanks for reading.
Feel free to make suggestion and corrections if you find any misconceptions in this article, it will help me improve a lot.
Thanks for reading (@michaelofurum )