What is investing?

Question

I need to know because I have a project do tomorrow and its about Resource Of Investing! And Idk anything about this stuff! What is investing? Whats good about it? And whats bad about it? PLZ HELP!

Answer 1

There are two general directions. One is the short term and the other is the long term application of money (capital, priniciple) to make its value grow. In the short run, the better and more precise word is speculation. If I bought some stock, a car, a piece of land, etc. in order to sell it in under 1 year, the tax man says the normal tax rates apply. But if I sell my "investment" after 12 months, then I get taxed at the usually lower capital gains tax rate (in the US). Think of it as the difference between chasing chickens (or whatever) each day for immediate gains (in the stock market we call that trading), or planting a tree. You might get some fruit from it next year (like a dividend perhaps), or chop it down for lumber (as in sell it for your retirement) several decades later, but it won't have grown enough tomorrow, or next week, or next month to usually make it worth your while.

In stocks, investing asks, "What is this company doing so well that the whole company (and my little piece of it) will be worth more next year or next decade?" In stocks, the speculator or trader asks, "Will other traders be buying or selling this stock for a lot more next hour, next day, or next week?" So if you are interested in a company for what its stock price is, you are a speculator. If you are interested in a company because of what business it does, you are an investor.

Answer 2

Investing means putting your money somewhere it will make increase. A simple example is a savings account-- you let the bank use your money, and they pay you a percentage. You can get up to 5% interest on a regular savings account if you shop around.

Other forms of investing are bonds, mutual funds, stocks, gold, collectibles, real estate, and so forth. You buy them with the expectation that they will be worth more in the future.

The good thing about investing is twofold: one, you are saving money, two you are (hopefully) growing your money.

The bad thing about investing is risk. You could lose your money. Usually the riskier the investment, the more it pays. Savings accounts are pretty safe, so they earn a small return. Real estate can gain up to 30% or more a year if you buy well-- or it can lose money if you guess wrong. Sometimes there's no market for the investment (you can't sell it) when you need the money. This is more likely true of collectibles or real estate than financial securities.

Also you're putting your money in someone else's hands, which is a risk in itself. They might be incompetent or even dishonest. If someone promises you a return on your investment that sounds too good to be true, it probably is.

You might check out an investment company like Fidelity.com for information about investment vehicles like bonds, mutual funds and stocks.

Answer 3

Investing is the art of making your money work for you. The good thing about it is if you learn how to do it correctly you can let your money bring you more money eliminating the need to trade your time and labor for money. The bad thing is the risk of losing your money. The most successful investors have learned to manage risk.

Answer 4

What is investing?

An attempt to make your money work for you instead of doing nothing. You use your money to invest in something to earn yourself additional money. (i.e. Stocks, Real Estate)

What is good about it?

It allows you to achieve your financial goals in life.

What is bad?

Many people simply have no idea how to invest properly so they end up gambling instead of investing.

Answer 5

I loan you a dollar, you pay me back two. That's a good investment. I just made 100% on my money. It's that easy.

Answer 6

Investing in yourself is great (e.g. education). Investing in someone else is risky (e.g. stocks).