Investing 101 – A Beginners Guide to Investing

Investing refers to the purchasing of shares (share) in a company or in a product or industry. To invest in shares is to put money into an investment with the hope of a return/profit in the near future. Simply put, to invest in shares means owning an entity or an object with the primary purpose of generating income or an increase in the overall value of that entity/subject through some form of profit generation over a defined period of time. The profit is usually generated by some process such as the reinvestment of earnings, maturity, dividends, or capital gains. Investing in shares requires the purchase of shares at a price determined by the seller or a market maker.


There are various types of investments. These include fixed-income investments, equity portfolios, wealth products, venture capital, real estate investments and mortgage investments. Fixed-income investments include bonds, money market accounts, treasury bonds, CDs, gilt funds, treasuries, mortgages and preferred stocks. Equity portfolios consist of common stocks and preferred stocks among others.

A good way to determine what type of investing is suitable for you is to identify your risk tolerance, time horizon, level of expertise, level of knowledge and desired returns on your individual investments and goals. You can then proceed to develop a suitable investment portfolio for your specific needs. Different asset allocation programs cater to these different objectives and requirements. One type of asset allocation program involves buying stocks that you know will perform well either because of an experienced management team, low risk level or because of limited trading hours.

Another type of investor makes money from investing in a broad range of assets. They generally buy and sell large quantities of stocks, currencies or other commodities on a regular basis. This type of investor must be ready to bear market losses and take advantage of good opportunities when they come along. This type of investor may also have capital gains from his or her savings, certificates of deposits, mutual funds or other investments. As a rule of thumb, investors who invest in large quantities of shares, money markets, stocks and commodities should diversify their portfolios using a strong investment portfolio containing stocks of different companies.

Another type of investor is the growth investor. These investors generally purchase small amounts of stocks or other investments frequently in order to help meet their own personal financial goals. Growth investors also usually follow a set path with their investments, so it’s important to choose investments carefully and have a good understanding of your own investment personality. These types of investors usually do not set financial goals and instead let their stock investments guide their own personal financial affairs. They are not afraid to take risks and most often excel at the buy and hold style of investing.

When you decide to start investing, there are many ways to get started including online investment companies and financial organizations, stock brokers and other accredited investors, mutual funds, bonds, commodities and other investment products. You can also start investing in yourself right from day one. Some people start out with mutual funds. This type of investing allows you to get started right away with a low risk level, a low cost and a conservative management approach. All of these benefits make investing an excellent investment option for virtually everyone.