Investments

An investment is a way to grow your money. You start by using an amount of money, called a principle, to purchase something that will result in a material or monetary profit. Some may think that you need to have a lot of money set aside to start investing, but in reality you don’t – you can invest with less than one thousand dollars if you so decide. Of course, you’ll be limited in what you can invest in, but any return is better than nothing. Most Americans who opt to invest have at least one thousand dollars to set aside.

There are two popular types of investments. These include ownership investments, lending investments, and cash equivalents. Ownership investments are items, whether physical or otherwise, that you own, such as real estate, precious metals, businesses, or stocks in a company. Stocks, for instance are shares or percentages of a company that you can purchase and sell at your own convenience. Lending investments involve lending money to companies, banks, or governments in the same way that a bank might loan money to you. Savings accounts and bonds, which are purchased for a fixed period of time and garner interest, are two of the most popular examples of lending investments. Finally, when you invest in a mutual fund, you offer money to invest in a number of different opportunities, including stocks, real estate, bonds, or even precious metals. This is known as diversification.