Understanding Financial Investments

• Investing involves allocating money with the expectation of future benefits, known as returns in finance.
• Returns can be gains or losses from selling property or investments, unrealized capital appreciation or depreciation, or investment incomes like dividends, interest, or rental income.
• Returns may also be affected by currency exchange rates.
• An investment refers to an asset acquired to generate income or appreciation, which is an increase in an asset's value over time.
• A financial investment is an asset bought with the intent to sell it later at a higher price.

Types of Investments

• Investments come in various forms, including stocks, bonds, investment funds, bank products, options, annuities, retirement plans, education savings, alternative and complex products, initial coin offerings, cryptocurrencies, commodity futures, security futures, and insurance.
• Investments can be grouped into fixed income and equities, alternatives to these, and other investment assets.

Fixed Income and Equities

• Equity investments typically consist of stocks or stock funds.
• Fixed income securities usually consist of corporate or government bonds.
• Fixed income refers to interest payments that an investor receives, based on the borrower's solvency and current interest rates.
• Higher interest rates are offered based on the maturities of fixed income investments.
• Equity investment involves buying shares in a company to gain ownership interest, which can be sold later to generate returns based on investment objectives.
• Treasury bills, money market instruments, and asset-backed securities are examples of fixed income investments.

Alternatives to Fixed Income and Equities

• Alternative investments are financial assets that do not fall into conventional equities, income, or cash categories.
• Alternative investments tend to be less easily converted to cash, or illiquid.

Other Investment Assets

• Investment assets are tangible or intangible items obtained for producing additional income or held for speculation in anticipation of a future increase in value.
• Currencies are a generally accepted form of money, including coins and paper notes, issued by a government and circulating within an economy, such as pesos, dollars, and euros.
• Cryptocurrencies are a form of payment that can be exchanged online for goods and services, using blockchain technology.
• Blockchain is a decentralized technology spread across many computers that manages and records transactions.
• Commodities are basic goods used in commerce that are interchangeable with others of the same type, such as oil, gold, and base metals like nickel.
• Real estate investing involves the purchase, ownership, management, rental, and/or sale of real estate for profit.
• Insurance policies are used to hedge against the risk of financial losses resulting from damage to the insured or their property, or from liability for damage or injury caused to a third party.