Investing in share markets is perceived by many as a good option to generate wealth, whereas, others may see it as a risky possibility. But according to the experts, if you invest and hold your stocks for a long time it could produce inflation-beating results. Shares are volatile or high-slipping over a short period of time, but investing wisely in right shares could help in making profits.
- Bonds: The amount of money which a company borrows from multiple investors, in exchange for payment of interests, is called bond. It is similar to the loan taken from banks. It is a form of investing money by lending to others.
- Shareholding: In exchange for the money, companies issue shares. Owning a share is similar to holding a portion of the company.These shares are then traded in the share market. As a stockholder, you share a portion of the profit the company may make as well as a portion of the loss a company may take. As the company keeps doing better, your stocks will increase in value. Also read: How do you Buy and Sell Shares
- Derivatives: it is often difficult to fix a price for shares because of their fluctuating nature. That is why some people prefer investing in derivatives. Here, you fix a price in the present and do the trading in future.
- Mutual Funds: These are the most popular investment tools. They take money from a lot of investors and then invest somewhere. Every mutual fund scheme issues units, which have a certain value just like a share. When you invest, you thus become a unit-holder. As the share gets profit, it is distributed in the form of dividends.
The market has a lot of money-related activities going on within itself, if we want to create a wealth system we will have to earn it. That's why it is advisable to invest in diverse areas-diverse securities. When you diverse your investments, you diverse your rsks.