John Labunski

What is an investment and how does it work?

Knowing what an investment is will help you make the best decision to grow your money and put it to work to obtain returns and increase your assets.

To understand what an investment is, we must know that it implies the certainty of a possibility of obtaining profits after carrying out a specific economic or financial action and guaranteeing that certainty with money. This is one of the most common ways to put money to work for you.

To be sure that this certainty of obtaining profits is a great possibility, it is necessary to do a deep analysis prior to the action of placing money in that certainty. Without analysis you don’t invest, you bet and, as you know, bets are riskier.

In more specific economic terms, in an investment a certain amount of money is assigned in advance, available to third parties in order to obtain monetary returns in the form of profit, previously calculated and established in advance.


What are the types of investments?

Investments are divided into two according to the type of expected results: business and financial. The business ones are those that place money in the hands of entrepreneurs in order for a company to develop and make profits over time. In that case, investors expect a return on investment established from the beginning, according to the growth possibilities that are projected.

Financial investments are those that acquire securities related to the financial market, with the aim of obtaining profits from the capital placed through the behavior of those assets. These types of investments are the most common, as there are different options with different rules and specific returns for each of them.

It sounds complex, but it’s the investments you hear about in the business segments on the news. Each of the traded securities is assigned a performance study that is used by investors to analyze their chances of making a profit after placing their money.


Financial investments are divided in different ways:


For the period of time:

Short-term investments present options for making quick money, however, they are also very risky. Long-term investments offer better options to generate more money and offer more security, with the disadvantage of having a lot of flow or liquidity.


By type:

When broken down by type, they can be any of the following: Money Market, Bonds, Equities, Forex Market, Stocks, Stock Indices, Metals, and Commodities.

Now that you know what an investment is , we recommend that you seek the help of John Labunski specialists who can advise you on this matter.


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