Investment is something that is purchased with money that is expected to produce income or profit. Investments can be broken into three basic groups: ownership, lending and cash equivalents.
Ownership investments are what comes to mind for most people when the word "investment" is batted around. Ownership investments are the most volatile and profitable class of investment.
Lending investments allow you to be the bank. They tend to be lower risk than ownership investments and return less as a result.A bond issued by a company will pay a set amount over a certain period, while during the same period the stock of a company can double or triple in value, paying far more than a bond.
These are investments that are "as good as cash," which means they're easy to convert back into cash.With money market funds, the return is very small, 1 to 2%, and the risks are also small. Although money market funds have "broken the buck" in recent memory.
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The providers of small savings schemes want to achieve this by providing the common people with investment options that offer high returns without high risk. There are various ways in which the small saving schemes of India are run.
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1. Public Provident Fund Schemes
2. Deposit Schemes for Retiring Employees
A mutual fund is a collection of stocks and bonds. When you buy a mutual fund, you are pooling your money with a number of other investors, which enables you (as part of a group) to pay a professional manager to select specific securities for you. Mutual funds are all set up with a specific strategy in mind, and their distinct focus can be nearly anything: large stocks, small stocks, bonds from governments, bonds from companies, stocks and bonds, stocks in certain industries, stocks in certain countries. More information »
A Dematerialized account is opened by the investor while registering with an investment broker. The Dematerialized account number is quoted for all transactions to enable electronic settlements of trades to take place. Every shareholder will have a Dematerialized account for the purpose of transacting shares.
A demat account also helps avoid problems typically associated with physical share certificates, for example: delivery failures caused by signature mismatch, postal delays and loss of certificate during transit. More information »
Bonds are a form of debt. Bonds are loans, or IOUs, but you serve as the bank. You loan your money to a company, a city, the government – and they promise to pay you back in full, with regular interest payments.
A city may sell bonds to raise money to build a bridge, while the federal government issues bonds to finance its spiraling debtsBonds are issued by public authorities, credit institutions, companies and supranational institutions in the primary markets.
A bank takes in deposits from customers who establish certificate of deposits, checking accounts, savings, accounts, and other products. It then lends these funds out to people applying for mortgages on their home, business loans, construction loans, and a whole lot of other projects.