The word “investment” can be defined as putting money toward something with the hope it will produce income or profit. The whole idea of “making money work for you” is drawn from the idea of investment. Many beginning investors have problems choosing investments, or even knowing what qualifies as an investment. Here are a few investment options to get you started.
Stocks, Bonds, and Mutual Funds
While these are three different types of investments, they are closely related. Stocks can be defined as pieces of paper declaring you own a portion of a company. Partial ownership will entitle you to certain rights, such as selling the stock if you believe it’s going down, or keeping it to gain dividend payments.
Bonds are a little different. When purchasing a bond, you’re essentially lending your money to a company or government, and in return they provide interest on the money and pay back the amount lent out to them. People like these because they’re less risky than stocks, but the return is comparatively low.
A mutual fund can be defined as a collection of the two. With a mutual fund, you essentially pool money into a fund with a group of other investors, usually with a distinct strategy in mind. The problem with all three investment strategies in this category is the investor has to relinquish control of their investment, something Jason Hartman firmly advises against.
Gold can be considered what’s called an “ownership investment.” Essentially, the investor buys the product to own it, and then sells it to gain a profit.
Gold isn’t necessarily a good investment, though its popularity has been sky high for the past decade or so.
Any money put into starting or taking part of a business can be considered an investment. Though reward from business can sometimes be harder to realize, when you do start reaping profit, it can be extremely rewarding. One important thing to consider when starting a business is it requires more than just an investment. Not only is there a lot of effort involved, but it often requires a fantastic idea which people will pay for.
History has proven income property to be a very lucrative investment. Purchasing income property is the investment which powers Jason Hartman’s wealth, and with the right strategies, it’s possible to create a stable financial present AND future with it. The concept of investing in income property involves acquiring one of our primary needs, housing. This is why it works so well. With income property, it’s possible to profit not only from from appreciation, but also cash flow when you rent the property out, and from the intrinsic value of the asset.
are many other types of investments, these are some of the major ones. Now that you know your options, what will you invest in? Feel free to tell us in the comments. (Top Image: Flickr | 401(K) 2012)
The Young Wealth Team