Essentials

Investing is the act of buying assets with a view to generating future profits and is "making your money work for you."。Every investment comes with a certain level of risk, but with thoughtful planning and strategy, your attempts have the potential to pay off。

Investment is a balance between risk and return. Generally speaking, the higher the potential return, the greater the investment risk。

Each investment comes with certain risks, your assets may appreciate or depreciate, and the underlying company or institution may default or go bankrupt。Usually, these are more extreme cases。

But keep in mind that you can choose to follow the same route, or you can allocate your funds to different assets (ie, diversification)。

Cash and cash equivalents

This one is about how to balance short-term funds between different accounts - for many people, including checking and savings accounts and cash in their wallets。

In addition to these traditional short-term capital allocations, many people are turning to higher-yielding accounts, and they may be able to earn more interest on their deposits。Some banks offer high-yield savings accounts with higher interest rates than regular accounts.。Nonetheless, given their correlation with the federal funds rate, these rates may rise or fall。

You can also choose to keep your cash in a deposit slip (CD), another type of savings account that has a higher interest rate than a regular savings account。However, in exchange for higher interest rates, certificates of deposit have fairly strict rules on when funds can be withdrawn (usually at the end of the term, or a penalty for early withdrawal may be required)。

Stock

A stock is a unit of ownership of a company and represents a portion of the company's assets and income。For many, investing in the stock market is the key to building wealth。

Nonetheless, stock investments can be quite volatile - your asset value can increase or decrease rapidly。Many factors affect a company's share price, from the company's production and supply chain to large global economic events and general investor sentiment.。

One way to potentially cushion volatility is to invest in funds that bundle different assets and, in a sense, invest in diversification, which is what some exchange-traded funds (ETFs) and mutual funds do。ETFs typically track an index, such as the S & P 500。Mutual funds are similar to ETFs, but can only be traded once a day。

Bonds

Bonds are like IOUs issued by companies, governments or institutions in exchange for cash.。In exchange for a loan to one of these entities, the bond purchaser will receive a specified payment (also known as a coupon) at fixed intervals。Like stocks, most bonds can be traded on the financial markets。

There are different types of bonds。The federal government issues government bonds, and individual cities or regions can also issue municipal bonds, which are called corporate bonds.。

Bonds are usually less risky for investors than stocks - because companies usually have to meet their obligations to bondholders before shareholders。In addition, interest payments on bonds are generally considered more stable than profits or capital gains, which may depend on the company's performance。In addition, it is widely believed that a large stabilization institution like the U.S. government is unlikely to default on its financial obligations.。

Real Estate

Buying a property, such as a home, is often seen as a relatively stable investment, especially given the current housing shortage in the United States.。Whether the market value of a property rises or falls, you can usually benefit from its residential function (owner-occupied or rented)。

Those who can't afford a down payment or mortgage but want to invest in real estate can invest in a real estate investment trust (REIT).。These companies own, operate and seek to profit from real estate, and owning part of it is a way to share in that business。

Commodities

Commodities are physical commodities such as gold, oil, beef and orange juice.。

Commodity trading is often considered the domain of advanced traders who are well aware of factors such as supply and demand (as well as seasonal trends) for these commodities。Take the oil industry, for example: an agreement among OPEC countries could limit oil production and could drive up oil prices - these markets are complex and require consideration of many potential dynamics。

Cryptocurrency

Cryptocurrencies are digital assets used for investment or payment。Typically, they are not backed by any government or central bank and their transactions are recorded on the blockchain.。

Although cryptocurrencies are not government-approved fiat currencies, they can often be traded like currencies on the forex market.。Note: Since its inception in 2009, cryptocurrencies have been an extremely volatile asset.。For example, Bitcoin has experienced sudden rises and falls in recent years.。

Collections

There are also non-financial assets, some of which include souvenirs, collectibles and art.。These portfolios often take a long time to build and may require a keen eye and in-depth knowledge of their relevant markets。It is difficult for a layman to judge whether the appreciation of a work of art or collection may。

How to start investing？

Investing is figuring out how much work you're willing to do and how much risk you're willing to take。As a general rule, younger investors are likely to take more risk because they have a longer time to recoup their losses。

Once you have determined the risk tolerance and goals of your investment, you can consider sending some of your funds up the mountain through one or more of the above paths, hoping that they will reach the peak。

Note: Diversification does not ensure profitability or prevent losses in the event of a market downturn, and dividends may be terminated or reduced for various reasons.。

The above is a general description of today's common investments, can not fully describe all the risks and precautions, some may not be suitable for novice or even experienced individual investors。You should carefully study and consider all risks and costs before investing。