Investment is putting your money into assets like shares, property or real estate with the goal of earning higher returns over time. This differs from saving, which typically involves storing your money in low-interest savings accounts. Investing can also help you beat inflation, which decreases the purchasing power of your money over time.
There are many different types of investments, ranging from cash and high interest savings accounts to stocks, bonds, gilts and mutual funds. To find the right investment for you, start by exploring your options and assessing your risk tolerance. Then choose an investment account that fits your financial goals, investing time frame and budget.
Stocks (also known as equities) are share ownership stakes in public companies. They offer the potential for higher returns than savings accounts or certificates of deposit but can be volatile, meaning they can lose value in a short period of time. Stocks are usually purchased through a diversified vehicle, such as a mutual fund or an exchange-traded fund (ETF).
Bonds and gilts are loans to companies or governments that pay you interest over time. They are less risky than stocks but don’t provide higher long-term returns. Bonds are sometimes used to diversify an investment portfolio or as a short-term income solution.
Commodities are physical goods, such as gold, oil and agricultural products, which can be purchased directly or through specialised funds that track their prices. They tend to offer lower returns than stocks and bonds, but may offer better protection against inflation.
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