Fundamentals of an investment:
Investments are measured in terms of risk and return. The higher the risk, the higher the corresponding return. Investments are primarily valued and tracked as a function of time and rate of return. The longer the investment takes to yield a return, the longer the rate of return is applied.
Types of Investments:
Investments come in all shapes and size’s and countless different risk levels. However all investments generally fall into one of two different categories:
- Real Investments
- Financial Investments
Real Investments involve the commitment of real assets.
Real Assets - These are inputs that can be owned. Do help you understand see the list below of common examples of real assets.
- Property such as real estate
- Equipment and machines
- knowledge and education
- Natural resources like oil
Financial Investments involve commitments of financial assets.
Financial Assets - These are claims often contractual claims or paper representing the value of a real asset, ore even the claim on the ownership of a future real asset that may not yet exist. Refer to the list of financial assets below to get a better understanding.
- Loans or bonds
- Stock or other forms of equity
- Stock options
- Commodity futures
Now if that did not get your blood pumping then you are most likely normal except for the fact that you were able to get through it.