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Introduction to Investments

Introduction to Investments

If you want to achieve something in life, you’ve got to start young. This holds true for most career paths available to us today. While investments are more of a side dish than the main course when it comes to earning money, they’re still an important avenue for revenue generation. So start investing while you’re young too – which means setting aside some dough from your very first salary towards an investment fund. As a 20-year old, just starting out in life, you might not know that much about investments. But don’t you worry, don’t you worry child, see I’ve got a plan for you (to paraphrase the awesomeness that was Swedish House Mafia).

Investment options 101 – simplified

  • Equities. The word equity implies that you’ve got a certain degree of ownership on the firm you invest in. Also known as shares, they pay out a certain percentage of the company’s profit, if there’s any left over after all expense have been paid off. The exception to this situation is preferred equity, where a fixed amount is dished out regularly as dividend, but there isn’t much increase in the payout even when the company is posting massive profits.
  • Debts.No, not the student loan kind, these are good. In debt issues, a government body, company, or other such firms basically accepts your investment in the form of a loan of sorts. They’re pretty much saying this is an IOU deal, but generally there’s little to no interest here. Instead, if the debt issue is worth say $100, you can buy it for $75, and after a fixed, pre-determined period, the debt issue matures to its full face value of $100, at which point the parent company buys it back from you at this full value. 
  • Real Estate. Straightforward really, this one. You invest either in a plot of land or a built-up house, building, office complex or whatever. As the value of the property escalates over time, you can chose to sell at a higher rate and make a profit.
  • Gold and other precious/rare metals and gems. Investing in gold has always been a solid investment option. You buy the gold, or other precious metal outright, or invest in mines and prospect sites. The rates at which these commodities are traded globally tend to fluctuate, so you need to time your investment to make the biggest profit.
  • Collectibles. Art, books, baseball cards, Pokémon cards, basically anything that is rare and people would want to add to their collection qualifies here. People actually make a living investing in such knick-knacks and selling them to the highest bidder. You’ll be surprised how much people are willing to pay to complete their collections, whether it be Picasso’s paintings or baseball cards of the Yankees from a particular season.

For those of you who know a thing or two about investments already, you’ll notice I haven’t included derivatives in this piece. That’s because they are a little more complex, and as such will take an article by itself to explain properly. But who knows, maybe I’ll write about it in the future. For the time being, happy investing! Later gators.

About Karen Durkins

Your very own guiding light for all-things-business. Personal Finance advisor by profession, career counselor by choice – always happy to help!

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