What is Investing?

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What is Investing?
Investing is a way of using your money to earn more money. It differs from basic “saving” in the sense that investing requires an active part in making the money grow, whereas saving is just passively waiting for the money to earn interest.

Investing is like “pooling” money into something for other people to use. It’s like allowing somebody to use your own money for a variety of reasons with the knowledge that the borrower will pay some form of interest at a specified time in the future. This “money-pooling” may be in the form of stocks, mutual funds, bonds, and other investment products.

In the case of buying stocks from a particular company, the person putting in the money is letting his money be used by the company for re-investment purposes. This particular company may also be involved in various investment projects, including their own investments to bigger organizations. The money from investors may also be used for various expansion programs which are expected to generate more income and profit to the company. Along with the company’s success in business, the invested money by a particular individual will also grow. This money growth may be in the form of stock dividends given to investors from time to time. Or the money growth may be in the form of higher stock value. If the stock value is higher than the original amount paid for it, then the investor can gain some profit if he/she decides to sell the same stock at its current higher value.

Others may also invest their money by going into business. Taking the business route however requires knowledge in running a particular venture before gaining any profit. It may also mean a longer waiting period for the money to come in, as some businesses may take time to be successful.

Investing is not for everybody though. Each person must have enough knowledge in a particular investment product or opportunity before taking this big financial decision. Others may also need expert advice from financial planners to have a better understanding of how to manage their money.

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