What Does Investing Mean?
What does investing mean and how can you start investing?
Investing in when you put (money) into financial schemes, shares, property, or a commercial venture with the expectation of achieving a profit, according to oxford.
To put it in words you and I can better understand, investing is when you put money into something with the aim of making profits from that thing. It could be a business, real estate or project. (1)
For example, if you buy a laptop you want to start a business with. You’re investing in the laptop with hopes that in the future you will start earning money from the laptop that is way more than the amount you bought it for.
For beginners, investments can be monetary assets that help diversify and further develop your financial portfolio in the long run.
This implies a long term approach with a specific goal.
How do your investments earn money?
Most investments earn the investor money through appreciation, interest payments or dividends.
Appreciation means that the value of an asset has increased. If you purchased an item for $100 and in five years it’s worth $500, then the collectible appreciated in value.
Securities can do the same — a stock issued by a company can increase in value over a number of years.
There is more risk
Even though investing can earn money for you, it is not without risks. The biggest risk with investing is that you may lose the money you invested.
Unlike checking or savings accounts, whose value is guaranteed by the Federal Deposit Insurance Corporation (FDIC), investments have no such guarantee.
Do you think you can handle the risks of investing? Or would you rather settle for the increase that comes with owning a savings account?