One can make money through investments in three ways: one, they can lend money to someone (be it the government or a business) on interest; second, they can become a part-owner of a business, like purchasing shares in a particular company; and lastly, by buying assets that tend to increase in value over time, such as real estate or bullion. The investment universe boils down to these three components, namely fixed income (bonds), equities (stocks), gold, and cash and cash equivalents or money market instruments.
This article will walk you through different types of investments available to an investor.
Why is investing better than saving?
Investments hold the key to an investor’s future. They help to bridge the gap between their dreams and reality. Following are some of the benefits of investing*:
- To reach your financial goals:
Be it purchasing a house or buying a car, or paying for your child’s education or marriage, or even planning for your retirement, investing can help you to meet your financial goals and objectives. Investing your capital is the most optimum ways to achieve your long-term goals.
- To beat inflation:
Investing your money also helps you to beat inflation. If you choose not to invest and rather keep your money in a regular savings account, your money’s purchasing power may decline over time due to inflation. Thus, to insure your money’s worth, it makes sense to invest in financial products that have the potential to fetch inflation-beating returns.
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