What are Investments

 Hello everyone, 

Let's start with the first blog of Why to Invest, Where to Invest & How to Invest. This blog website is going to be mostly about what are investments, what are the best ways we can get the best return. I am not going to give a final judgement of where to specifically invest but a overview of the markets. 

What is Investing?

Basically investments can be defined as using your capital to increase assets, in simple words it is the way of how money is used and investing it somewhere, where you think you can get a profit in future. Investments are done for many reasons such as economic stability, increasing your funds and profits and many more, some people are so accurate that their day to day business is-to invest or be the middleman in an investment or to advise where to invest.

Investment is done after an amount of calculated risks(risk hai to ishq hai), you have heard in mutual funds in adds probably that say “mutual funds are a subject to market risks.” You need to be very accurate while you are calculating the risks, well I will talk about risks and risk profiling in further episodes in detail.

You guys must be thinking that just put over all my money left in the savings account. Well you are thinking that your money will increase over time in numbers, but the truth is your money's value will be decreasing over time. That's because of the inflation rate always the bank saving account interest rates are below the inflation which means throughout the time your money will depreciating its value.

Investments are done in many different ways, like the mutual funds, stock exchanges, through brokers. Investments are done in various types of asset classes, asset classes are basically a group of assets and are clarified into various groups, they are basically shorten down such that we can identify where we are investing.

Asset Classes:-

  • Commodities(Gold, Silver & etc) 
  • Equity 
  • Debt 
  • Real Estate 
  • FDs
  • Liquid assets 
We will be discussing Equity and Debt in detail in our upcoming posts. But in short the meaning both are as following. 


Equity - Equity is classified as the ownership of the company/ firm. While you invest in equity is equal getting some amount of part in the company/firm. 
While investing you should know about terms like EPS, shares outstanding, price of a share & P/E ratio. These terms are the most common terms while you invest in equity. These terms tell whether to invest in that scheme or not further we will also look on other ratios which will help compare different schemes with each other. 

Debt - Debt funds have two main roles one is the lender and another is the borrower. The borrower borrows the money from the lender and pays him the original amount with an interest rate added to it, you can count the bonds, FDs which are the types of debt funds.

There are typically two ways of returning money to the lender.
  1. Simple Interest 
  2. Compound Interest 
You would be thinking that how can we trust the borrower or how much is the ability of the borrower to repay the amount with the specific interest rate. Don't worry we will be covering that in our next post.

For now I hope you all got a basic gist about What are Investments. Just a recap Investment refers to putting your money in an asset with the aim of generating income. 

Bibliography:- https://thumbor.forbes.com/thumbor/fit-in/900x510/https://www.forbes.com/advisor/wp-content/uploads/2022/12/types_of_investments.jpeg.jpg


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