Investing

Investing, broadly, is putting money to work for a period of time in some sort of project or undertaking in order to generate positive returns (i.e., profits that exceed the amount of the initial investment). It is the act of allocating resources, usually capital (i.e., money), with the expectation of generating an income, profit, or gains.

• Investing involves deploying capital (money) toward projects or activities that are expected to generate a positive return over time.
• The type of returns generated depends on the type of project or asset; real estate can produce both rents and capital gains; many stocks pay quarterly dividends; bonds tend to pay regular interest.
• In investing, risk and return are two sides of the same coin; low risk generally means low expected returns, while higher returns are usually accompanied by higher risk.
• Investors can take the do-it-yourself approach or employ the services of a professional money manager.
• Whether buying a security qualifies as investing or speculation depends on three factors—the amount of risk taken, the holding period, and the source of returns.

Investopedia

Risk and return go hand-in-hand in investing; low risk generally means low expected returns, while higher returns are usually accompanied by higher risk. At the low-risk end of the spectrum are basic investments such as Certificates of Deposit (CDs); bonds or fixed-income instruments are higher up on the risk scale, while stocks or equities are regarded as riskier. Commodities and derivatives are generally considered to be among the riskiest investments. One can also invest in something practical, such as land or real estate, or delicate items, such as fine art and antiques.

The returns generated by an asset depend on the type of asset. For instance, many stocks pay quarterly dividends, whereas bonds generally pay interest every quarter. In many jurisdictions, different types of income are taxed at different rates.

Economists view investing and saving to be two sides of the same coin. This is because when you save money by depositing in a bank, the bank then lends that money to individuals or companies that want to borrow that money to put it to good use. Therefore your savings is often someone else's investment.

Types

1. Stocks
2. Bonds
3. Funds
4. Investment Trusts
5. Alternative Investments
6. Options and Other Derivatives
7. Commodities

Investing Styles

Active versus passive investing

The goal of active investing is to "beat the index" by actively managing the investment portfolio. Passive investing, on the other hand, advocates a passive approach, such as buying an index fund, in tacit recognition of the fact that it is difficult to beat the market consistently. While there are pros and cons to both approaches, in reality, few fund managers beat their benchmarks consistently enough to justify the higher costs of active management.

Growth versus value

Growth investors prefer to invest in high-growth companies, which typically have higher valuation ratios such as Price-Earnings (P/E) than value companies. Value investors look for companies that have significantly lower PE's and higher dividend yields than growth companies because they may be out of favor with investors, either temporarily or for a prolonged period of time.

Robo-Advisor Investment is a thing as well. An example is M1 Finance.