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The Why’s And How’s Of Investment

What is an investment?What is an investment?

Investment is a term that scares a lot of people. Besides being nearly synonymous with large amounts of money, it is poorly publicized and not often taught. Investment has something of a mystery surrounding it that makes it seem unapproachable.

So what is investment and should you take part in it?

Investment, first of all, is the process of giving money in order to receive more than you gave. For instance, buying the ingredients to make cupcakes you intend to sell is an investment. Hopefully, the cupcakes sell for more than you invested. On a larger, and more complicated, scale, the buying of stocks, bonds, mutual funds, and things like 401K’s are also investments.

What is an investment?

The question of whether or not to invest money in anything is, largely, a personal one. As in much of life, what is right for one person is not necessarily right for another. The potential gains are incredible, and the potential failures are also incredible. Things like how much disposable income is available, how much time you have to wait for it, and what you are saving for, should all be considered when making the decision. The general consensus among financial experts is that investing is always a sound financial decision. The argument comes in where to invest.

Getting started requires a little knowledge, some research, and often some professional help. There are three main areas of investment. They are:

Investing in yourself means, simply, that you are putting money into a self-run business. Or, for less specific purposes, putting money into a friend’s business. It is something that requires a great deal of work on someone’s part, as well as a good premise, great products, and everything else that makes a business successful. This is in the high risk category, which means your money could disappear more easily than it could grow.

The stock market is truly a roller-coaster ride of ups and downs. Stock is, essentially, small pieces of a company. These pieces are sold in order to generate more revenue for the company, and can be bought by anyone with the money. Once bought, they can also be sold, and the owner can make quite a profit on this. However, the market has good and bad days. When the market is up the stock is worth more than you bought it for, when it is down, they are worth less. Sometimes patience is all that is required to see them brought back up, and sometimes a crash simply stays down. The stock market is, perhaps, the fastest way to gain money, but it is also the least secure.

Secured investments are things like bonds, which are backed by the government, and retirement or life insurance plans. These are designed to either pay out an agreed-upon amount, or be worth at least what you originally put into them. These are, typically, the safest way to invest money.

If you’ve decided to invest your money, there are a couple of things you can do. The first, and not recommended, is to do the research and invest by yourself. The other, and more proven, track is to go to a company like Edward Jones, Charles Schwab, or Scottrade. These companies have people who are highly trained and have a great deal of both knowledge and experience. Though it can be, initially at least, difficult to hand your hard-earned money over to someone else, this is probably your best shot at getting a good return.

With the right knowledge, a little money, and the right help, investment does not have to be an intimidating prospect. Millions of people invest their money every day in the hopes that it will grow and provide for them in later years, and a lot of them realize that dream.

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