An investment is the investment of money in order to obtain income or preserve capital. A distinction is made between financial investments (purchase of securities) and real investments (investments in industry, construction, etc.).
Investment definition
The Great Encyclopedic Dictionary in its 2002 edition defines “investment” as the long-term investment of capital in sectors of the economy in the country and abroad.
People who invest are called investors. Anyone can become a private investor – a middle manager, financier, doctor, teacher, student or pensioner, you do not need special education. It is a way for them to earn additional income. Traders are the opposite of investors, they constantly carry out short-term transactions, this type of activity is their main source of income.
Although investments are designed to make a profit for the investor, they are not a guaranteed way to make a profit. Different ways of investing give different guarantees of income, but in all cases there is a risk that the investor will receive a loss instead of a profit.
Ways to invest privately
There are many ways to invest money in the stock market. Some do not require extensive knowledge of financial markets, others are reserved for professionals.
The most common things that can be invested in the stock market include:
- Capital investments
- Bond investments (government or corporate)
- Investments in precious metals (gold, silver, platinum)
- Investing in ETFs or mutual funds
- Purchase currencies
- Investing in derivative financial instruments (futures, options, swaps, etc.)
Investment periods
To make it easier, private investment is divided into groups according to their duration. There are three groups in total:
- short-term (up to one year)
- medium-term (1 to 3 years)
- long-term (from 3 years and up)