With the economy the way it is today, it is not surprising that people are looking for ways that their money can do more for them. The most obvious of these is investment. People invest in the hope of high returns (interest) on the money they put into it.
For those seeking a stable, steady return on investment, the bond market is a viable option. Ownership of a bond entitles one to regular interest on its value, as well as return of the principal investment. This type of investing carries minimal risk.
People who are willing to take chances, in the hope of even higher return possibilities may invest in the stock, or commodities market. These markets involve the purchase of shares in a company, or quantities of gold, oil etc., respectively. The main intention is to resell these at a higher market value, for a significant profit. This is not necessarily the outcome, however, as prices for these can fluctuate and an investor can just as easily face loss.
This risk of loss is greatly intensified in the forex market. This is a somewhat complex type of investment, beyond the scope of this article, that involves the buying of one currency against the value of another. A simple way to think of it is betting on the strengthening, or weakening of a country's currency against another. This type of investing is highly leveraged and vast wealth can be created, or lost, rapidly - attractive to investors who enjoy risks.
Some other investment types, common among larger investors, include the derivatives market - based on futures, and stock options. Though, somewhat, difficult to understand, this market is used to trade the "right" to purchase certain stock (stock options), via contract, or other, more challenging to value, future prospects. Another investment type, associated with large investors, is money market. Put simply, this is the furnishing of funds to a borrower, for a fixed length of time, and interest rate - a loan.
Spot markets are attractive to some investors because, although they encompass other markets (such as commodities), they execute transactions immediately, as opposed to the usual delay. For example, normally when an investor buys gold on the commodities market he does not get his purchase right away. In fact, he may never lay hands on it before reselling it. This is where the spot market differs.
The over-the-counter market involves the purchase of investment devices without going through a centralized exchange, e.g. buying shares of stock from a friend using a broker.
The second to last investment type, to be discussed, is quite popular among those with the resources to do it - the real estate market. This involves buying properties (land) with the expectation that its value will increase and it can be resold for a profit.
Finally, there is private equity. This is similar to the stock market, in that shares of a company may be bought, however, these shares are not bought on the exchange. Instead, the deal is negotiated personally between the investor and the company's owner(s).
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