Investing Basics: What you should know

git 6

Most people work to make ends meet. Ironically, most of them would also want to be rich someday. The irony here is that you really can’t get rich if all your income goes toward paying bills. Instead, riches come from investments, talents, or hitting a jackpot! Unfortunately, the only way most of us can become a little bit rich is by making some investments. The following article will hope to offer some investing basics, especially for you who are very interested in opening an investment account.

Bonds and Stock Investment

If you are interested in joining the stock market, it is important to know a lot about the industry. For one, there is too much debt in the stock market, even though most people only speak about equities. You can invest in bonds and make good money, but only if you are a wise investor. Let me explain. A bond is money given to an investor to use for some period and bring it back after a predetermined period of time, with an interest of course. With this in mind, you can research about the bonds to invest in and the stocks to avoid.

Risk Factor

Whether you plan to invest on bonds or stocks, you must be mindful of the risk factor. With a bond, the business you lent your money could fail to pay it back. That is called default risk, or a sugarcoated term for a loss in this case. The business could also become bankrupt, but fortunately you get paid something as a bond investor. For shareholders however, profits only come in if the business they invested in is in a loss. If it becomes bankrupt or makes a loss, you also lose.

Suitability

While bonds look like a good investment because of their low risks, they are not suitable to low-income investors. In fact, most people only invest on bonds through mutual trust groups. The rich can however by bonds from the government, but only if they have high capital investments. Buying stocks on the other hand is easier. You don’t need much money to buy stocks from a local company for instance. Unfortunately, stocks are very unpredictable. One morning you could see your investment bringing a 10% profit, the next the profits are down to 1%.

However, the great thing about investments is that they can be profitable and predictable once you invest in learning about them. You can take a simple investment course to learn investing basics from www.giants-it.com and start investing.

Leave a Reply

Your email address will not be published. Required fields are marked *