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    Types Of Investment

    By InvestMe | November 11, 2016

    types of investment

    various types of investment

    When you are in a financial industry, you are available with two concepts which form the base of majority of the transactional activities. The first one is savings and another one is investments. There is a vast overlap in between both of the concepts due to its terms of execution. Investment when seen in financial context means any of the money which is spent presently in the hope of getting financial benefits in future time period. Any of the investment is like an act of buying or even creating assets having an expectation that the same will give interest earnings or capital appreciation or dividend or any other form of return which is profitable as compared with the money which you put in at the start. Almost all the types of investments are different from one another based upon the kind of transaction done and also the aim behind spending the money. Money which is spent on making investment is basically with a aim of getting some sort of return in some specific period of time. Many of the times people gets confused between savings and investment. Both this concepts are totally different on the grounds of the utilization of the money involved. Savings can be considered as a good way of collecting wealth and investment tis like an aggressive way of getting more returns and not just collection. In case of savings account, people generally have one account and they throw their entire money ion that account and utilize it whenever and wherever they need.

    Types of investment

    Types of investment have two sections namely traditional and alternative. Let’s have a look at both the types of investments.

    The well-known financial products will fall in this category of investment. This includes bonds, shares, and stocks and like this.

    Bond can be taken as IOU which is generally issued by an issue or we can say borrower to a lender. These are the instruments which are used for public and private both sectors for raising huge sum of money which cannot be lend by the banks. After that these are issued in the market by the borrowing party and are bought by the lenders for specific amount of money. Plenty of lenders get together for lending the needed amount of money the borrowing party is able to raise the capital for growth and other purposes.

    Equity or let’s say stock are issued by the companies and are offered to the general public. This will avail a chance to the companies for raising money. Stocks will give right ownership to the company to the person holding it. Stock and equity is the same thing and equity is considered to be the greatest and most popular way of investment in the entire world. It is because of the reason that the return offered by this stocks is usually higher as compared with that of any other financial institution. However for balancing this high return, the risk involved in stocks is also quite high. Any company can o0ffer various types of shares to the general public based upon its financial needs. These are generally divided into two types’ common stocks and preferred stocks.

    Small savings scheme is one of another popular saving tool in the financial market. The term itself indicates that this scheme is made for saving money in small denomination. The concept behind this financial tool is that it enables the habit of saving money in people for almost people of all economic sections.

    Mutual funds are those financial instruments which are managed professionally and it also invests money on behalf of any of the investors. Mutual funds can be classified into many different types based upon the types of securities which they invest in. Some of the most popular types of mutual fund investment can be open ended funds, stock funds and balanced funds. These funds can be classified based upon their percentage allocation in various securities.

    Alternative investments are those which are not regular investments just like bonds, stocks etc. These investments are made for acquiring precious metals, jewelry etc which are expected to earn returns in future time. These investments can be called due to their complex and non-traditional nature. Here are some of the types of alternative investments.

    These can be taken as professionally managed partnership structure or private investment company. Techniques for managing these funds are not very much commonly allowed for companies which are regulated by SEC. Hedge funds are such which are invested in both public traded securities and financial derivatives. These are very much famous as an alternative investment tools covering high returns and high leverage.

    Private equity is similar to trading in shares only but of operating company which is not listed and shares of that company are also not available in the stock market also.  Institutional investors will employ several strategies for indulging in private equity trading. Private equity is also very much famous as it offers lots and lots of diversification for financial portfolio by allowing all the investment which is not tightly coupled with normal investments.

    It is one of the most popular types of investment strategies which are presently being deployed majority of the investors opting for startup scene. The concept behind this type of investment idea is to make investment in substantial capital in one of the budding companies in return for getting the stocks of the same.

    These types of alternative investments will involve managers who are using futures as a part of their investment portfolio. Manageable futures are an excellent tool for offering portfolio diversification and thus there are great alternative for minimizing the risk and maximizing the returns. In general having a manageable future account will be having enough exposure for several markets like agriculture, commodities, energy, currency and such others.

     

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