Investment is the dedication of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort.
In finance, the purpose of investing is to generate a return from the invested asset. The return may consist of a gain (profit) or a loss realized from the sale of a property or an investment, unrealized capital appreciation (or depreciation), or investment income such as dividends, interest, or rental income, or a combination of capital gain and income. The return may also include currency gains or losses due to changes in the foreign currency exchange rates.
Investors generally expect higher returns from riskier investments. When a low-risk investment is made, the return is also generally low. Similarly, high risk comes with a chance of high returns.
Investors, particularly novices, are often advised to diversify their portfolio. Diversification has the statistical effect of reducing overall risk.
Investing can intimidate a lot of people because there are many options, and it can be hard to figure out which investments are right for your portfolio. This guide walks you through 10 of the most common types of investments, from stocks to crypto, and explains why you may want to consider including each in your portfolio. If you’re serious about investing, it might make sense to find a financial advisor to guide you and help you figure out which investments can help you to meet your financial goals