In general, investment is to distribute money in the expectation of some benefit in the future,
What are the different types of investments?
1. Shares
2. Property
3. Fixed Interest
1. Shares
Shares are considered a growth investment as they can help grow the value of your original investment over the medium to long-term.
If you own shares, you may also receive income from dividends, which are effectively a portion of a company’s profit paid out to its shareholders.
Of course, the value of shares may also fall below the price you pay for them. Prices can be volatile from day to day and shares are generally best suited to long-term investors, who are comfortably withstanding these ups and downs.
Also known as equities, shares have historically delivered higher returns than other assets, shares are considered one of the riskiest types of investment.
2. Property
Property is also considered as a growth investment because the price of houses and other properties can rise substantially over a medium to long-term period.
However, just like shares, the property can also fall in value and carries the risk of losses.
It is possible to invest directly by buying a property but also indirectly, through a property investment fund.
3.Fixed interest
The best-known type of fixed interest investments are bonds, which are essential when governments or companies borrow money from investors and pay them a rate of interest in return.
Bonds are also considered as a defensive investment because they generally offer lower potential returns and lower levels of risk than shares or property.
They can also be sold relatively quickly, like cash, although it’s important to note that they are not without the risk of capital losses.
In finance, the benefit from the investment is called a return. The return may consist of a profit from the sale of property or an investment, or investment income including dividends, interests, rental income etc., or a combination of the two. The projected economic return is the appropriately discounted value of the future returns.
Investors generally expect higher returns from riskier investments. When we make a low-risk investment, the return is also generally low.
Investors, particularly novices, are often advised to adopt a particular investment strategy and diversify their portfolio. Diversification has the statistical effect of reducing overall risk.