Investing or Investment is a term with a number of meanings, and many of the meanings are closely related. The term is widely used not only in finance and personal finance, but also in economics and management and several related disciplines. In very plain and simple words, Investing means purchasing an asset out of the capital accumulated through savings or postponement of using the money for consumption or both.
The term investment or investing is used in many closely related fields like Economics and Business Management, Finance and Personal Finance, and Real Estates.
Financial Investments, particularly those related to personal Finance may take many forms and may be done in a variety of ways – some of the popular investment segments are:
- Bond Investments
- Certificates of Deposit
- Exchange Traded Funds
- Mutual Fund Investments
- Real Estate Investments
- Retirement Funds
- Stock Investments
- Trading in Futures
- Variable Annuities
The above list is only an illustrative list, and we all should strive to expand the list and share our experience related to these segments of investments on the related pages.
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Investing: Some MistakesEdit
Everyone makes certain mistakes while investing. It is rather common and you may have also expereinced the same and may have learnt ferom trial and error at times. Investing presupposes that you have money before you invest. Some persons even borrow to invest and basically there is nothing wrong in it if your investments give you better than the cost of borrowed funds, that is, interest. However, it is very difficult unless you are an investment wizard of a sort! Thus, most of the people invest from the money which they have saved over a period of time. You may have one or more types of investment portfolios to cater to your future requirements like education of children, buying a home and resources after retirement. There may be more types of such portfolios depending on your specific requirements. In building any type of portfolios, you should avoid certain common mistakes which many learn only after paying a fee in the form of loss to arising out of their investments. Some of these rules are indicated briefly below:
- Absence of diversification
- Not understanding the investments properly
- Running after making instant returns
- Chasing results
- Absence of allocation
- Absence of risk assessment
- Following all advices & Tips
- Absence of any homework
- Investing & Forgetting
- Changing & Deviating from investment objectives