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INFORMATIVE NEWS FOR INVESTORS

Guest post by: Michael Peter

Article Overview: Investment is a means of doubling or increasing our earning potential. It is also the art of having our money work for us with multiplier effect. There are basically three types of income/cash flow one can get as an investor.

INFORMATIVE NEWS FOR INVESTORS

Investment is a means of doubling or increasing our earning potential. It is also the art of having our money work for us with multiplier effect. There are basically three types of income/cash flow one can get as an investor.

1. Earned income - this is generally wages earned as an employee
2. Portfolio income - this is income earned as a result of investments in paper assets such as bonds, stocks and mutual funds.
3. Passive income - this is income made from real estate investments whether by leasing, rental apartment etc.

Investment is also classified in terms of duration, that is, maturity date. If an investment has a maturity date of six months or less it would be classified as a short term investment. Any investment that matures within a year or more would be a medium term investment while an investment for a period of five years or more would fall under the long term category of investment.

Real estate, shares/equity, gold, bonds and short term deposits are some of the investment types available. Every type of asset involves different investment plans that cater to diverse forms of risk, return, liquidity, and maturity date.

Below is a brief explanation of the various types of investment;

Real estate: It is the safest, most stable form of investment that comes with huge cash flow. It also has the age long advantage of constant appreciation no matter the economic situation. It is beneficial for those who have their eyes on the long-term.

Shares/equity: This is simply investing in companies that are listed on the stock exchange and would require the expert advice of seasoned stock brokers who have a good knowledge of technical analysis of investment, the entry and exit period which is the key to successful stock/equity investments. The investors can gain profit through dividends, capital gains and bonuses. Through shares/equity, investors can become part owner in vast range of companies working in different regions and can take advantage of long-term gains.

Bonds: This is an investment form with a maturity that fall between medium and long term. It is generally considered as IOU issued by a private company or government establishment. The investors invest money in the bonds for a period of one or more years, at an agreed interest rate. Nevertheless, the investors can withdraw the deposited money for the trading purpose. Preferably, one should choose sound government establishment for investment in bonds.

Short term deposits: These are basically short term investment options in the money market that offers full liquidity. This simply means investors can withdraw all their funds whenever they dim fit. It is ideal choice for short-range savings or impromptu cash need. Bank saving schemes is one of the most popular amongst all the safe investment options but offers very little in terms of return on investment.

Gold: This is one of the safest and finest investments. The prices of gold are based on the market demand and supply. When gold is bought at a low price and sold when its demand is at its peak, it brings huge profit. With the advent of the World Wide Web, electronic gold trading is holding more sway than buying it in physical form. It would make a whole lot of sense to seek help and advice from those who deal in gold so as to gain some insight as regards investment in gold business.

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