What is an investment?
Investing is a long-term depositing of cash in a bank account where it sits to earn interest. Investing is actually a kind of gamble. Instead of promising a guaranteed return, a person takes a risk with the money invested with the hope that the profit will be much bigger than investment. However, there is the possibility that ultimately, you are left with less money than your initial investment.
A person can invest in almost everything such as:
- Bank notes
- Government bonds
Or invest in much more “exotic” channels, such as:
- Agricultural land
- Ancient cars
- Growing technology companies
- Art, for example, paintings or sculptures
For the majority of the investing public, investing means putting money in the stock market, which is the capital market in which there is constant fluctuation in this direction even with the management of professional and skilled investment portfolios.
This guide is first and foremost about investing in various stock markets when it is the first attempt of most people to invest. Although there are different ways to do so, the principle of investment remains the same. A person takes a bet with his money because there is no guarantee that he/she will get it all back. In the worst case, the investor can lose the entire investment.
It is a gamble.
Investing in stock markets is a gamble. While you can make a small profit or make a big profit, any stock market investor can lose small or lose big – and eventually come out empty-handed.
Always remember the five golden rules of investing in the stock market:
- The more an investor wants the return, the greater the level of risk that comes with this level.
- Do not put all your eggs in one basket. Try to diversify as much as you can to reduce your exposure to your risk. Invest in companies, industries and regions.
- If you maintain a short term of investment, it is wise not to take too much risk. It is recommended to invest with investment portfolio management for at least five years. If this is not an option, it is often best to stay away from the capital market and invest the money in a savings account.
- It is always appropriate to review the portfolio. A share may be in a fall or an investor may not take as many risks as he did in the past. If you do not go over the portfolio of investments regularly, you can eventually continue investing in a stock that loses money.
- Do not panic. Investments can go down as well as go up. Do not be tempted to sell or buy shares just because everyone does.