To invest is not so much a definition as it is a description. To invest simply means to put money into an investment with the hope of seeing a return/profit in the near future. Simply put, to invest simply means possessing an asset or something with the express purpose of making money from the investment or simply the appreciation of that asset over some length of time. So essentially the question is how can you invest and what are the benefits of doing so?
There are many reasons one could cite as being the reason one would want to make an investment and those could be personal, business or both. One such reason is the desire to see economic growth in ones country. Some say the economic growth will aid in curing one of their cancerous ulcers. That is a valid point, but then again maybe you just want to see it pay off sooner rather than later, so that vacation you had on the Caribbean beach is no longer a reality.
The most common form of investment is stock or bond investing. This means to buy an asset and sell it for a higher price. The asset is the stock or bond in question. This is often how finances are raised for any number of purposes including retirement. Usually there is some sort of risk in regards to these types of investments, but if done correctly, they can generate very high returns on a very short term basis.
Other forms of investing can be spread trading or futures trading. A spread trade is simply the buying and selling of one particular asset over the course of a specific period of time. For example, let’s say there is a commodity that is valued in dollars. If you believe the price of that commodity will rise over a set period of time, in other words if the price moves up, you purchase low and sell high. This type of investing is most commonly associated with options and futures which are all very liquid investments.
Finally, there is the bad news and the good news. One of the bad news is that as an investor you are really just gambling. You are purchasing an asset on the hopes that it will increase in value. However, when the bad news hits and it doesn’t, you have no asset to fall back upon.
Now, on the bright side, we have nominal interest rates that are still low, and therefore investing in stocks, bonds and other assets is still a good idea. The two year economic recession that was experienced during the end of the last decade is fresh in the minds of many investors. Also, many investors were able to ride out the crisis because they had cash in hand, or they had their savings. Therefore, even though recessions are not good for your portfolio overall, they can be used to your advantage. You can use a bad economy to your advantage and take advantage of both good and bad economic times.