Nikit Shingari | Investments Guide For Beginners
For someone new to investing it can seem complicated and overwhelming as there are different types of investments. But you don’t have to worry because this guide is to help you understand the basics of investment. There are various assets and investment opportunities, says Nikit Shingari.
Understanding the various types of assets to invest in will help you decide and choose the one that fits your need based on your risk tolerance. The truth is that you cannot learn everything about investment in one day as a beginner but you will be given an overview of investment generally. As well as all the basic investment principles that can help you grow money over time. Let’s quickly take a look at the meaning of investment for a better understanding.
It is buying into something you believe will increase in value later in future. In other words, you put your money into something to get a profitable return. There are lots of benefits to investing your money which includes growing your money, earning higher returns, reaching your financial goals and more.
Since we cannot discuss all the various investment platforms, options or assets let’s consider the popular ones. Understanding the following financial instruments as well as the risk involved is very important for every beginner.
It is the buying and selling of shares in publicly traded companies and is known to be a common investment for beginners. Buying a stock is buying a share of ownership in a company which investors buy to profit from when there is an increase in stock price. The performance of the company is what determines the stock price. Through the help of exchanges such as the NYSE, stocks are traded and regulated.
A mutual fund is a mixture of different investments, some of which are usually managed by professionals. Mutual funds are a diversified investment which is what makes it less risky to invest in them. You can get your profit or increase in value through net asset value, dividend or capital gain.
Exchange-traded funds (EFTs)
ETFs are much like mutual funds but are low cost and hold various stocks and securities together. The good thing about ETFs is that you can buy and sell them on a stock exchange just like a normal stock. It is considered to be a good investment for low budgets and new investors.