When you ask the question what is investment, we can say it is putting your spare money to work for you. The way most of us were taught to make an income is to get a job and work a set amount of hours every week. The only problem is if you want more money you must work more hours at your job. That could mean giving up those leisure activities at the weekend so the extra money is of no use if you haven’t got the time to spend it.
So if you want that free time to enjoy the money you must put your funds to work in a good investment. With investment you can be sleeping or performing any other activity while still earning money. That is the true beauty of investing, you can really maximise your earnings potential. So it won’t matter if you don’t work that overtime, you can still be making that extra money.
The most important concept for you to understand is the simple idea of putting your money to work for you. There are many investment vehicles available for you to invest in including mutual funds, stocks and shares, bonds, real estate or even starting up a business. Each of these investment vehicles has positives and negatives and you must be aware of those. Losing trades is part of the game so you must ride out the storm and hang around for those profits to come in.
Lets understand that investing is different from gambling. With gambling you are betting on an uncertain outcome in the hope you might win your bet. Or for example you get a hot tip from a friend at the bar, then this would be gambling as you did not analyse the market beforehand. You simply took a random stock pick from a friend. Real investors do not operate in this manner. A good investor will not just throw money at a random stock, instead he will carefully analyse things and put money in when there is a good chance of seeing a return on the investment.
So why do people even bother with investing? Well we all want to be able to afford more of the things we like in life. Most people also seek the freedom investing can bring. But in this day and age, gone are the days of being able to retire on a big fat pension. Governments are tightening their belts therefore the responsibility for having a good pension relies on you. So its best to have a sound plan in place to ensure you are financially stable in those later years.