How Investments Work

HOW INVESTMENTS WORK

Massimo Acquaviva

HOW INVESTMENTS WORK An investment is the plan individuals put into place to make their money generate a return for them in the future. Investments come in many forms, and depending on various factors, they can work out well or lose money.

Regardless, investing is the avenue through which a lot of people gain financial resources for retirement or major purchases, so it is important to understand how it works.

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The Market From an investing perspective, the market describes the place where investors can buy and sell assets. In most instances, a bank account will not work for investing, as investors need an investment account depending on the type of asset they’re looking to invest in.

BONDS VERSUS STOCKS Publicly traded companies often issue stocks or bonds to raise money to fund aspects such as growth, expansion or operations. Stocks are small pieces of equity in a company that can be publicly sold or bought, with the stock price giving a general indication of a company’s value. On the other hand, bonds are used when a company is asking investors for loans to raise money. The company pays back the bonds over time with interest.

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Massimo Acquaviva To learn more about this topic, visit the blog of Massimo Acquaviva, 2R Capital Investment Management Limited co-founder and co-CEO.