Investing in Financial Markets – Why Invest?
Investing in Financial Markets – Why Invest? What is an investment? Investing means gaining something in the present in the hope that it will add value in the future.
Investing in Financial Markets – Why Invest? What is an investment? Investing means gaining something in the present in the hope that it will add value in the future. Of course, the size or quality of this value is not exactly accurate. For example, the cash we use to buy consumer goods is only used to buy a company’s stock, in the hope that it will increase its stock value and make a profit in the future. investment? The goals of economic investments are not the same. It could be an employee who earns some extra salary each month, or a retired employee who has just retired and will lose value if he or she leaves the money in the bank.
One may even be an employee of a large, high-income company, or even a factory owner, but he or she is always worried about what would happen if his or her company or factory went bankrupt. So the first question we need to ask ourselves before we start investing is What do we want from the capital market? How much risk can I put in my investment? One of the most important factors that the investor should be aware of before starting the investment is the level of risk. Some people prefer to have a certain amount of monthly profit, but they are comfortable with the principle of their capital and are sure that nothing will be deducted from it. This group is likely to prefer bank deposits and are satisfied with the bank’s annual interest. Others are willing to risk their money if they know that the result of this risk can be a good and acceptable profit. There is a rule in the investment world that says the higher the risk, the greater the potential return and loss. How Much Money Should I Invest? Of course, it is not wise for a person to invest all his capital in a market, because the recession may go to that market and he may lose part or even all of his assets. It is not possible to say exactly in which market the investor will invest what percentage of his capital. But it must follow the principle of eggs and basket, As long as he never puts all his eggs in one basket, because if that basket falls, all his eggs will break. So if one thinks that the exchange rate has risen over a period of time, one thinks that the profit is in this market and converts all one’s capital into currency, the exchange rate may suddenly fall and this investor will suffer a loss.
