Investing: An Introduction
Investing is one of the most popular ways to increase your financial returns. It also makes for an easy and efficient way to grow assets. The problem with investing is that you need patience and you need experience in the markets to be able to get good returns on your investment. If you want to become a successful investor, it would be beneficial to learn about various asset classes such as bonds, stocks, real estate, commodities.
Investing is a way to grow one's wealth by purchasing assets. In order to get started, one needs to set up an account with a qualified financial advisor and purchase stocks, bonds, mutual funds, ETFs, or other investments. The most common type of investment in the United States is stocks.
Investment asset classes are defined by the type of security the investor is looking to purchase. For example, stocks are part of the equity class. Bonds are part of the fixed income class. The choice for an investment asset class should be based on the investor's risk tolerance and expected return. For example, stocks typically have higher potential returns but also come with more risk than bonds which offer lower returns but less volatility.
Investors are typically classified into three categories: conservative, moderate, and aggressive. The level of risk that an investor is willing to take typically determines the investment asset classes they can invest in. For example, conservative investors typically select investment assets that are low-risk with a lower return. These are typically tangible investments such as real estate or treasury bills. Moderate investors often err on the side of caution when it comes to investing in stocks or bonds, but still have a good chance for return.