If you are interested in starting to invest, there are three types you need to learn. The three basic categories are ownership, lending, and cash. Read this guide to help you have a clearer understanding of each investment type.
When you think about investing, you are probably thinking about ownership. Examples of ownership investing include stocks, businesses, precious objects and collectibles and real estate investing. As a reminder, anything that devalues after purchase is considered an expense. Once you decide to make an ownership type of investment, take the time to do your research as these are the most volatile and profitable. Finally, be sure to keep tabs on your investments to ensure you don’t miss any opportunity to buy or sell.
The second type is lending investment. This low-risk form of investing includes savings accounts and bonds. Traditionally, this has been managed through banks and governments. However, recently peer to peer investment, or P2P, has become a popular way to invest in lending. This form of investment is it is low risk and allows you to be either the borrower or lender. While the rewards are more moderate compared to ownership, this is an excellent way to get started with learning to invest.
The final type is cash investment. This form involves using low-interest short term accounts, such as money market or savings. What sets this type apart is that they can be converted to cash quickly. This is typically lower risk than either ownership or lending. Before you decide, keep in mind that the return value is lower than its counterparts. Finally, you want to avoid letting your money idle for too long, so you need to stay on top of your investment.
Whichever way you choose to invest, do your research to make sure it is right for you. Remember, you can always try more than one.