Investing is defined as the act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit.
Unlike consuming, investing earmarks money for the future, hoping that it will grow over time.
Investing, however, also comes with the risk for losses.
Investing in the stock market is the most common way for beginners to gain investment experience.
What kind of investor are you?
Risk tolerance is an investor’s ability to psychologically endure the potential of losing money on an investment. A person’s risk tolerance can change throughout their life and determines what type of investments they are likely to make.
To end up where you want to be, you need a financial plan. Ask yourself what you want. List your most important goals first. Decide how many years you have to meet each specific goal, because when you save or invest, you’ll need to find an option that fits your time frame.
Time has a big impact on what you can expect of your investments. Compound returns are the returns you earn on your returns.