Knowing investment for beginners is very important to learn as early as possible. Students or young workers need to know the investment for beginners so that there is an idea to manage finances in the future. You must know that managing the future including finance must be prepared from the start.
People do not always know investment because of the influence of the lifestyle environment. Generally, workers and students who have an orientation to be employees do not have a preference for investment. This is because they get income from work activities. They generally pursue job openings that provide a large income. Therefore they need to know investment for beginners.
Definition of Investment.
We find many meanings for this investment term. As an illustration, we quote freely some of their meanings such as below.
Investment is the activity of utilizing cash at this time, with the aim of getting results in the future. Because the future benefits are not known with certainty, the investment proposal required involves risk. As a result, they must be evaluated with respect to expected returns and risks. (James C).
Investment is an activity related to the effort to withdraw various sources of funds used to procure goods capital at the present time. These capital goods are then expected to produce a stream of new products in the future, (Fitz G).
We can conclude from the definition that investment includes several things, among others, funds for capital in the present, various kinds of assets or portfolios, risks, and profit expectations. To get to know the investment for beginners, young workers need to know the things above.
Investment Destinations for Beginners.
Investment has a very broad goal. This is because every person, community or company can invest in their interests. Therefore everyone will have a different investment goal than others, for example, someone may have an investment goal, among others, to get a more decent life in the future, reduce inflation pressure, push to save taxes, etc.
Other people or other companies may have different investment objectives, for example, as explained below.
Earn Fixed Income.
You can invest in a company, for example, then you have the right to get company profits on a regular basis. You can run this on the company going public, and you get dividends. Or you invest in bonds that will receive interest periodically.
You can invest in purchasing capital goods or land for example. This will increase your business capacity in the future.
If you invest in suppliers, there will be a guarantee that your business will not lack raw materials. Thus you also get a market to sell products because of the guarantee of continuity of production.
According to Gitman, there are several reasons why someone makes an investment, among others, is the accumulation of pension funds, increasing current income dividends or interest income, saving for large expenses (home, education, vacation trips, and capital to start a business), protecting income from taxes.
To get to know investment for beginners need to know the forms of investment. In terms of its business scope, the investment can be divided into two, namely:
Investment in real assets (or real investment).
Someone makes this investment if it is visible or physically visible. for example for the establishment of factories, the establishment of hotels, restaurants, plantations, property, land, precious metals, and others.
Investment in financial assets (or financial investment).
You can invest in this type if you are oriented towards securities. , for example, investment in stocks and bonds.
Types of Investment
We are familiar with several types of investments that are common in the business world. And we need to introduce investment for beginners.
Investments in the form of deposits of money, generally to financial institutions. Deposits generally have a time period determined by the guarantee that the investor will receive interest in the agreed period of time.
You can invest in closed companies or companies go public. Companies going public certainly have greater liquidity and security. This is because go public companies have a market for stock trading and are guaranteed by the government. We will discuss the stock later.
Companies or countries can issue bonds. This letter is debt. If you have bonds, then you have the right to get debt interest payments in accordance with the agreed conditions.
Mutual funds are a place to collect public funds collectively by investment managers. Investment managers use these funds to invest in stocks, debt securities, and others. You can buy mutual fund units in an investment management company.
Urban people like this type of investment. This is because people understand the scarcity of property and demand. This type of investment is in the form of buildings such as houses, buildings or apartments. This form of investment is profitable because the selling price of property often rises.
Investment in precious metals or gold
You can also invest in precious metals and gold. Gold tends to be more profitable because of rising prices and liquidity.