Investing 101: Your Bridge to the World of Finance

Investing 101: Your Bridge to the World of Finance

How do you manage your money? Have you ever thought of discovering the world of the stock market in the past few years? Well, the term “stock market” might seem very common for those who are already involved in the finance industry but vague for those who aren’t. That’s pretty normal, but what many people don’t know is that investing doesn’t only take place on Wall Street.

You, your friends, and family can invest without taking a mind-numbing class about Investing 101. You can also save for retirement, get involved in trading, or even watch the stock market alone. Investments are divided into different types, but dealing with the stock market is another story. So before anything else, you have to know first the most basic terms that can help your money move up the scale.

Asset Classes

If your personal asset is your face because of your captivating eyes and luscious lips, you can take the asset class as the type of product that you want to invest. For instance, you want to invest in products like bananas, apples, grapes, and oranges. Therefore, your asset class is “fruits”. The asset class has a wider and bigger range. It is divided into subclasses according to its size, location, industry, and so much more.

If you own a piece or part of a company or business, that falls under “equities or stocks”. If you lend money to the government or a company which includes different types of bonds and certificates, that falls under the “fixed-income or debt”. If you have your money in a savings account, drawer, or even in your pocket, that falls under “cash and cash equivalents”. But if you own physical assets like natural resource commodities, properties, and high-priced metals or stones like gold and diamonds, that falls under “real estate and commodities”.

Though asset class won’t give you the exact taste of your investment, it will help you understand each investment better. And, to give you a better picture of the different types of investments you can consider.

Stocks

If you want to buy individual stocks, it will help you become a shareholder or stockholder of a business. This also means that you are a part owner, regardless of the type of business you want to invest in. This will give you an opportunity to vote and take part in meetings while receiving profits from the business called dividends. Your ownership will be determined depending on the total amount of shares you own.

Bonds

Bonds are stable investments usually found securities on debt. Purchasing a bond means lending your money to a business or government organization and receiving it back with an additional interest. Bonds have a maturity date and interest rate depending on the amount of money you want to lend.

Mutual Funds

If you want to collect bonds and stocks, you would have to get mutual funds. This is an excellent choice if you want to get your hands on different types of investment with the help of a professional fund manager. However, the price of mutual funds may rise and fall too, just like bonds and stocks.

There are a lot more things you can learn from investing. These things are enough to enlighten and flick your interest in the finance industry. Once you’ve decided what type of asset you want to put your money, think of how much are you willing to risk. Do you want to become an active or passive investor? Do you prefer picking stocks or investments on your own or hire a professional to do it for you? Lastly, do lots of research including the involved fees to avoid losing money.