An investment is when one buys a temporary asset that aims to gain value over the years.
One can use an investment later in the future or sell it to make a profit. The purpose of investing is to accumulate money for future plans, be it long-term or short-term. One should be very aware of why they are investing and into what they are investing in.
Not all investment options are for both long-term and short-term goals. For example, if one wishes to invest for a short-term goal, buying a share wouldn’t be ideal. This being because shares only mature after a long period of time. Buying shares would be ideal if someone was aiming to buy a car or a house.
There are three basics types of investments. You get:
Ownership is the most unpredictable and profitable class of investments.
These are your stocks, putting money into a business, real estate etc. Gold, a painting by Da Vinci and a signed Michael Jordan jersey can be considered at ownership investments. All these items appreciate over the years and can sell with great returns. Many people choose to keep such items for a very long time before selling them.
Lending investments tend to be lower risk than ownership investments.
This then results in fewer returns. However, these investments allow you to be the bank. These include savings accounts and bonds. Lastly, Cash Equivalent investments are investments that are basically easy to convert to cash. An example of these would be money market funds.
Buying minerals can also be considered as an investment because minerals don’t depreciate, they only appreciate. In fact, there are a lot of people that suggest minerals rather than shares. “Better rocks than stocks”. Many factors influence the value of minerals over time, like demands due to its scarcity. However, it is better to buy minerals if you have 20 years to wait before selling it.