Any rational financial enthusiast must have encountered these Investment terminologies (Return, securities, securities market, etc) in the various investment environments. But what exactly is investment? Before we dive deep into the definitions, this article is aimed at acquainting us with the basic terminologies of investment to help us get started on the right foot.
- Investment is any vehicle into which funds can be placed with the expectation that it will generate positive income and/or that its value will be preserved or increased. Investment means the sacrifice of current cash for future cash. It involves time and risk. In an economic sense, an investment can be described as the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price.
- portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, as well as their mutual, exchange-traded and closed-fund counterparts. Portfolios are held directly by investors and/or managed by financial professionals.
- Risk: chance that actual investment returns will differ from those expected
- Return can basically be described as the reward an investor gets for for owning an investment. can be in the form of current income or Increase in value.
- Investor: an investor is someone who provides money or financial resources for an enterprise, such as a corporation, with the expectation of financial or other gain.
It encompasses the kind of marketable securities that exists and where and how they are bought and sold.
- Investment process; This is concerned with how an investor should proceed in making decisions about what marketable securities to invest in, how extensive the investment should be, and when the investment should be made.
- Securities; This is a legal representation of the right to receive prospective future benefits under stated conditions.
- Security markets; This is a meeting place for buyers and sellers. It is a part of the financial market where securities are traded between subjects of the economy, on the basis of demand and supply.
With these basic terminologies, all is set to look at the different types of investments.