Understand what investing really means
Many investments have a twofold purpose. They generate income and they increase in value. In other words, if you invest a lump sum you get regular small payments of some kind and the actual value of the capital itself increase, i.e. the lump sum gets bigger.
Let’s suppose you invest in property. In an ideal world you should be able to rent it out, thus providing the regular small payments in the form of rental income, and the value of the property should go up also, so your capital increases in value over time.
Likewise shares should pay out dividends and should be worth more than you bought them for when you come to sell some time later. You get the idea. And notice I say “should” rather than “will” – nothing is certain in this game.
You can of course invest in pretty well anything you want:
- company shares
- fine wines, paintings, krugerrands, classic cars, rare books
- pension funds and such like including savings and deposit account
- inventions and new product development
- ideas and people
- theatre shows, films, TV programme development
And it doesn’t have to be just plain old investment. There is also:
- sponsorship such as race cars, football teams etc. to raise brand awareness
- angelic capital – you invest in people and ideas in an altruistic way rather than purely as a money-making venture.
Remember that investments of any sort are a form of gambling no matter which way you look at it. And that you can lose.
On the other hand, investing in a broad range of low risk investments can still net returns worth having.