Investments in Simple Words
Investments in Simple Words – Nowadays, many people with savings are looking to invest. For some, the goal is to protect money from inflation, while others want to achieve more and significantly increase investments. A common type of investment is direct investment . Such investments can be made by both companies and individuals. Their essence is that in the case of direct investments, the investor participates in the activities of the invested object directly, and does not buy securities or other assets on the exchange just in order to receive dividends or earn on the difference in price. Investments in Simple Words.
Types of direct investments
Bank deposits. This is the most common type of direct investment that does not require any special knowledge. Almost all people who have savings place money on bank deposits. The overwhelming majority of people have a bank account and have made this type of investment at least once. Bank deposits are distinguished by a high degree of reliability and, as a result, are the least risky. The interest on term deposits is guaranteed and known in advance. It is small, but it allows you to at least partially protect the accumulated funds from depreciation. Deposits are available both in rubles and in foreign currency, as well as for different periods, usually from 3 months to 3 years.
Purchase of precious metals. Many people also use this type of direct investment. “Gold will always be gold,” they reason. And in many ways these people are right. Over the past twenty years, gold has risen in price against the US dollar by 7-8 times. It is unlikely that such a return could have been achieved by placing dollars on a time deposit. At the same time, in the case of short-term and medium-term investments, investments in precious metals can bring losses, since their price, with a general long-term upward trend, tends to change both up and down. It is difficult to predict whether gold or another precious metal will be worth more in 3 or 6 months, or if its value will decrease.
Where to invest money
Purchase of shares of investment funds. In this case, the investor buys the share, and the management company disposes of all the shares. However, with the onset of a crisis and inept and untimely actions of managers, investors may suffer losses. Therefore, in comparison with bank deposits, the degree of risk with these investments is higher.
Direct investments can be domestic and foreign, and in terms of investment time – short-term, medium-term and long-term. It is advisable to place most of the funds on time deposits, and in different currencies, for example, rubles, dollars and euros. The smaller part, in order to increase the overall return on investment, is better to invest with a reasonable degree of risk. These can be shares of investment funds, precious metals, as well as PAMM accounts in the Forex market.
Investment in cryptocurrencies has become fashionable in recent years. Indeed, during periods of growth, here you can increase your capital several times. At the same time, the very high volatility of the cryptocurrency market entails a high investment risk, therefore, investing, for example, in bitcoin, can only be those funds that are not afraid to lose. Among other investment instruments, experts also name shares of large companies and bonds.
Investments in cryptocurrencies are becoming more and more popular every day. Bitcoin and some other cryptocurrencies have stood the test of time, and nowadays, many investors and experts predict the growth of this market. The reasons for the growth are the growth in the number of users, the arrival of institutional investors in the crypto industry, inflation of conventional currencies, and some other factors.