Before you start investing, it is wise to get a good understanding of this. You do this, among other things, by knowing the definition of investing. We provide this definition in this article. We also list some investment products on this page and give you some general tips if you want to start investing.
The definition of investment
Investing means committing money for a shorter or longer period of time, with the aim of obtaining financial benefits in the future. If you invest your money, then you put your money into a specific product. You do not do this for nothing, but to earn money in the long term. The goal of investing is therefore to make a profit.
You make a profit with investing by putting in less money than you ultimately earn. If, for example, you invest 100 pounds in stocks, you must earn at least 100.01 pounds to make a profit. An investor strives to achieve the highest possible profit.
The various investment products
You can invest in many different products. These products are also called investment products. There are tangible investment products and intangible investment products. Examples of tangible investment products are buildings such as houses, office buildings and shops, jewellery, wine and so on. Examples of intangible investment products are stocks, bonds, options and various currencies. Thus many products fall within the definition of investing.
You choose in which investment products you want to invest. It is wise to invest in multiple products, so that you can spread your risks and opportunities. For example, let’s say that you invest in stocks and in real estate. If you do badly with your stocks, then you can compensate for this loss with your real estate profit.
Start investing: 3 general tips
Do you want to start investing soon so that you can make your assets work for you? Then it is wise to prepare well for this big step. We are happy to give you three general tips that the novice investor can use to prepare well for his or her first investments.
Tip 1: determine what kind of investor you are
There are many types of investors. For example, there are investors who prefer to make as much profit as possible and do not mind taking more risks, but there are also cautious investors. Before you start investing, it is good to determine what kind of investor you are. What kind of investor you are determines which investment strategy suits you best.
Tip 2: look for a good strategy
The best investors always act according to a certain strategy. Before you actually add stocks, options or other investment products to your portfolio, it is good to determine your strategy. You look for various strategies and you determine for yourself which strategy suits you best.
Tip 3: define your goal
Finally, you determine the goal for your investments. How much money do you want to earn, for example, and within what period? Your goal also affects your way of investing. That is why it is important to determine your goal before you actually start investing.