The term investing can be associated with various activities but the common aim of these activities is to make the funds invested during the time period generate more wealth.
Investing should help enhance the investor’s wealth.
The sources of funds to be invested include assets already owned, savings, and borrowed money. To invest requires that you save first. You forego today’s consumption.
Individuals and businesses can put their money in real or financial investments.
Real investment generally involve some kind of tangible asset for example real estate such land, a house; factory, machinery, etc. Financial investments involve contracts (in paper form or e-contracts) as stocks, bonds, etc
Speculation: It involves purchasing the saleable securities whose prices are likely to increase rapidly within a short term horizon so that they get a quick profit. Speculators are always looking for and buy at low prices and sell at dear ones.
Types of investors: Two types of investors: individual and institutional investors.
Individual investors (sometimes called retail investors) are individuals investing on their own.
Institutional investors are entities such as commercial banks, insurance companies, investment companies, pension funds and other financial institutions.