Investments
We all know the word savings and investments, do we really know what the meaning of those to words is and how it is related to our life.
Savings the left over money after all our expenses in a month for example an individual has an income of Rs.50,000/- P.M and he has an expense of Rs.40,000/- P.M then his savings is Rs.10,000/- this 10,000/- is the savings for this individual.
The above 10,000/- is kept on his savings account or as cash it will remain only as savings. The excess money which is invested some where to bring returns in the future is called investment.
After understanding what is investment now we have to see what all the types of investments are Broadly investment can be categorized as 2 types
- Real Asset
- Financial Asset
Real Asset
This is a type of asset where we can really touch and feel for example buying a real estate property, buying gold and silver.
Financial Asset
This is type of investment where the underlying instruments will be financial assets. For example investing money in fixed deposit, Recurring deposit (RD), Life insurance, Mutual funds, Shares and Bonds are called Financial Assets.
The above is the broad classification of types of investments, one have to look at investing both real and financial asset according to their investment goals.
One important thing which we have to remember when understanding about investment is asset allocation which means you must invest your money distributed across asset class so that you can mitigate the risk to get an average return.
