What Types of Investments Are Safe and Where?
To make an investment is to put your money with the hope of a return/benefit at some point in the near future. Simply put, to make an investment means that you have bought an asset or something with the intention of earning income from that investment or the appreciation of that asset that is, an increase in the monetary value of that asset over some period of time. The key here is that you have bought the asset with the aim of making an investment. You have made an investment when the price at which you can sell the asset has fallen to a level that gives you a profit that exceeds what you paid out. Making an investment is not as easy as it may sound and it has its own set of risks and rewards.
There are different types of investments: Some of these are fixed income investments such as bonds, shares, and mortgage securities; others are interest-bearing accounts such as savings accounts, certificates of deposits (TFC), and money market instruments such as treasury bills. Fixed income investments are considered safe because most of them are guaranteed by the governments. Investments in financial instruments are considered risky because, even if there is a significant increase in prices, you cannot get your hands on all of the cash that invested in it, unless of course you are a bank. But because stock exchanges offer direct investments, you can buy and sell shares of stock that are issued by companies that issue securities, such as equities.
One of the more risky but potentially lucrative ways of investing is in futures trading, because the risk of losing actual cash is relatively higher than any other form of investment. Most futures contracts are traded for less than the actual face value due to the fact that there is a risk of things getting worse before they get better, meaning that in the event that a contract is exercised, the price of the assets sold could fall significantly, forcing the investors to lose more money. However, there are certain types of futures contracts that allow the buying and selling of shares at a set date in the future, called a forward contract. The lower returns of this type of contract, of course, mean that it is not advised to be used as a primary method of investment. However, for people who do have experience in futures trading and would rather not take on large losses, the contract offers a way to earn some extra cash without suffering large losses.