Types of Involuntary Investment
To invest is to put money into an account or investment with the intention of a future gain/profit. Simply put, to invest simply means having an asset or item with the intent of making money from the appreciation or the increase in value of that asset over a specified period of time. There are many types of investments available on the market today such as stocks, bonds, mutual funds, and so on. A common investment is the stock market where shares of stock or equity of a company are sold in order to obtain profits.
A good example of an investment is shares in a company. Shares can be bought by an individual or company looking for growth or future returns in order to finance a particular project or investment. The cost of such an investment is relatively low as the company the shares in issue typically recoup their initial investment within a short period of time usually a few months to a year. Examples of such investments include the stock market where stocks are sold in order to make a profit. Subsequently, any profit made is reinvested in growing the business for increased production.
Another common form of investment in developed countries is the bonds market. Bonds, unlike stocks shares or assets, have a fixed rate of interest. As a result, bonds provide lower long term gains as rates tend to be higher for longer duration. Bond markets allow for relatively lower leverage, yet the risk is limited as well as the potential for higher returns. Other investments include the money market, commodities and foreign exchange where longer term investors make larger purchases of financial securities or portfolios to ensure they receive higher returns on their investments over a longer period of time
Long term investments are used by professional investors or wealthy families to reduce their risk whilst building their wealth. These may include buying shares in a company or a property that has potential. In addition, the purchase of bonds are used to secure long term funding for projects such as hospitals and education facilities. As such, they reduce any risks associated with investing capital and increase the capacity for long term investment. As the world’s resources are becoming scarcer, it has become more important than ever before for individuals to take an active role in investing in order to prevent themselves from losing money.
Variable insurance products are another popular method of investment where gains and losses are based on risk factors rather than earnings. This form of investment has seen dramatic growth in recent years due to the development and continued improvement of new technologies and medical insurance products. Examples include the New Zealand housing market, which has seen unit linked insurances increase over the past year.
Any form of investment will always be subject to risk and so investing in life insurance should only be undertaken after careful consideration of all the options available. By comparing quotes and researching policies, you should be able to find a policy that provides a solid return for your investment while maintaining low risk levels. All insurance products have their own advantages and should be used to their full potential.