There is a lot of risk that is involved in terms of making an investment. While making an investment you need to analyze the plan in the best manner as it does involves some risky affairs that can lead you to loss of money that are not usually under your control. The chances of losing money are always there when any bad investment is made that would significantly lead to in becoming a loser.
To derive some best of the interest, an asset is usually purchased and is thereby deposited in the bank. In comparison to both of the economics as well as the finances, investment leads to a great difference. When it comes to the economists they go for some real investment such as in a house or an equipment while the financial economists goes ahead with the financial assets to that of money being invested in banks or in markets later to be used in the purchase of some real assets.
The following are the types of investment you would usually come across:
Cash investments
This type of investment usually includes bank accounts, certificates as well as treasury bills of deposit.
Debt Securities
You usually get some fixed periodic payments as mode of return made on this type of investment. It is completely risk-free when compared to the other modes of investment. Being compared to the other securities it has been noted that the returns are usually lower here.
Stocks
Stocks are usually purchased as well as equities that would allow you to associate and be a part holder of businesses that would be sharing its profits with you. It is actually a risky affair if not done through correct hands, so we would always recommend you to go through Stockquantum to derive the maximum benefits.
Mutual funds
This is a type of investment that is collectively known as the collection of stocks as well as bonds involving it paying to a professional for the selection of the best type of security for you. The noteworthy benefit that is involved here is in tracking down the investment.
Derivatives
It generally explains that of the financial contracts as the cost is usually derived in the form of assets to that of the commodities, bonds as well as that of the equities. As a result of the fluctuating cost of the underlying assets, there is usually a minimum risk of losing anything.
You need to analyze the overall size of the organization through which you are going to purchase the stocks. To add up to your knowledge, the larger the company is, more stable your investment is expected to be as they are able to handle the fluctuations that are noted in the market while being compared to the other smaller companies.
Make sure that the company in which you are going to invest must have a good financial condition. Always keep one thing in your mind that a stock’s current ratio should exceed the value above – 2. Moreover, the long term debt should not exceed the value of total working capital for industries, and utility must be less than the value of twice the stock equity. If the stocks in which you are going to invest are according to these guidelines, then these will work well as a defense mechanism against any type of default or bankruptcy.
