Financial investors come in many different forms, and cannot all be put into one category. To keep it simple, anyone who purchases an asset or item with the hope that it produces an income or appreciates in the future for a positive gain can be considered a financial investor. Investors can be an individual with or without a financial background, or could even be a large organization or business which does this as their main business function. There are many different types of investments that investors can get involved in, and the game can be played by just about anyone who wants to get in.
One of the most popular types of investments would be bonds. Because of their safety, they are more attractive to investors. In general, bonds are usually referred to as any security that is originated on debt. When an investor purchases a bond, they are basically lending out that money to the company that issues the bond. The investor receives interest payments in return, and is eventually paid back the original amount that was lent out. The risk is very minimal, and in most cases the bonds can last for long periods of time.
Stocks are another common investment option, and when purchased the investor essentially becomes a part owner of the company. Depending on the specific type of stock purchased, the stock holder may have the option to vote at shareholder’s meetings and even receive regular payments in the form of a dividend the company gives out to owners. There is no guarantee a profit will be made, so the risks are higher as compared to bonds, but the returns that are made usually are higher as well. Purchasing stock requires more understanding and research about the companies the investor deals with.
Mutual funds are a hybrid collection of both stocks and bonds. When investors purchase mutual funds, they are pooling their money together with a number of other investors who then pay a professional manager to select specific securities for the group as a whole. The biggest benefit of a mutual fund is that financial investors can invest their money without the need of being an experienced or seasoned investor, and save time because they’re not physically managing the portfolio of stocks and bonds. Investors still need to do some homework to make sure the companies they select to manage the funds know what they’re doing.
Most other investment type’s fall into a category called alternative investments. These can be things such as gold and silver, real estate purchases, futures and just about anything that can be bought and resold for a profit. These investments are generally a higher risk with a higher reward, and the securities are much more complicated than simple stocks and bonds. Whichever way a financial investor chooses to go, the main goal is to make money with money.