Investment is the act of putting money into something that will increase in value or produce income over time. This can be in the form of physical assets that you sell for a profit or as returns from an investment plan. Investment can also be in the form of forgone consumption, such as a student choosing to study instead of going out on a weekend.
The benefits of investing are many, but deciding what and when to invest is critical. First, you need to determine your financial goals. This can include everything from buying a home to paying for college to saving for retirement. Once you know your goals, you can create an investment strategy that will help you get there.
You can choose to do it yourself by opening an investment account at a financial institution and researching assets. Or you can take a hands-off approach and use options like target date funds or robo advisors to manage your investments using a strategy built around your goals and risk tolerance.
A good rule of thumb is to diversify your investment portfolio by holding stocks, bonds and cash or cash equivalents. That way, when one type of asset does well, others may be doing worse, so you’re less likely to experience large losses. It’s also a good idea to peek at your investments at least once or twice per year to make sure they’re still in line with your financial goals.
About the Author
