What Is Investing

Investopedia defines Investing as “the act of allocating funds to an asset or committing capital to an endeavor (a business, project, real estate, etc.), with the expectation of generating an income or profit.”

When we speak of investing we are talking quite simply about putting away money in a vehicle that will produce a return for us some time into the future. But what do we mean by a “vehicle?” An investment vehicle is a technical term for anything that is capable of either generating profit or increasing in value over time.

What is an Investment Vehicle?

Typical investment vehicles include, stocks, bonds, index and mutual funds, businesses, real estate, intellectual property, corn, wheat, etc. Investment vehicles are classified into what we call different asset classes. For example, stocks, bonds and mutual funds are collectively called Paper Assets whereas corn, wheat and silver are termed Commodities.

How to Choose an Investment Vehicle

The first step in investing is to get information by talking to a Licensed Financial Advisor or a Wealth Advisor. The investment vehicle one chooses will be determined by certain factors including:

  • Your age
  • Your expected returns
  • Your risk tolerance and
  • The amount of money (capital) that you are able to invest among other things

However, despite these considerations there are some investment vehicles that are more accessible than others. Based on my experience, the easiest investment vehicle to get in to is the stock market. Why? Because of the limited number of requirements and the low cost of entry.

Featured Image source: https://www.tradersaccounting.com/


Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.