Investing refers to the buying and selling of securities on the stock market for the purpose of gaining financial benefits. To invest is also to put money into an account with the hope of a profit/ return in the near or distant future. Simply put, to invest simply means to buy an asset with the hope of making a profit or an increase in value of that asset over a short period of time, usually years. In the United States alone, investing in stocks and bonds is what many people think of when they hear the term investing. However, the term can be applied to any financial activity involving the buying and selling of stocks, bonds, mutual funds, etc.
When we are talking about investing, we generally are referring to buying and selling of equities (shareholdings) and the actual ownership of assets. We know that shares have to be traded to gain interest and dividends. We also know that equities are represented by stocks and that the prices of stocks are expressed as a markup or a cost of capital. An investor is said to be investing in shares if he or she buys shares at a fixed price (stated in the stock market), and then resells them for a profit when the market price has risen (it may have fallen as well). If the profit is more than the cost of ownership, then the investor can sell the shares for a profit, but only after paying taxes on the gains. There are rules governing how a shareholder can make profits, and there are rules governing when and how the dividends are declared.
Another common type of investment that is not as well known as investing in shares and stocks is bond and mutual fund investing. With bond investing, you invest in a fixed interest asset like a bond. With mutual funds, you invest in a variety of assets, like stocks or bonds. This is probably the most common way to invest in assets, although it does not offer the same tax advantages as bond and stock investing.