There are lots of different options, but here’s a brief explanation of two of the most common types of investments: shares and funds. (2)
Shares are investments that give their holder ownership in a specific company.
An individual becomes a “shareholder” in a company once he/she owns shares in that company. A shareholder is qualified to share the financial success or failure of a company. An investor chooses to invest in stocks of a certain company when a future price increase is predicted, or distributing dividends on shareholders is expected.
Shares that are expected to increase in value by time are called “Growth Stocks”, whereas shares distribute regular profits to its shareholders are known as “Dividend Stocks”.
Share prices can also be affected by other factors, such as supply and demand, interest rates and the wider economy.
2. Mutual funds
Mutual Funds are investment portfolios managed by a fund manager that aims to provide an opportunity for investors to participate collectively in the fund’s profits in exchange for specific fees.
One of the advantages of mutual funds is that they are managed by wealth management specialist.
Funds include many different investments rather than just one, which is why many people start by investing in funds.