To understand investing, it is essential to know what it is all about and why does someone need to do it. Investing is the act of purchasing securities or assets with the intention of holding them until the later stage in which you will sell them to recoup your investments. This is often referred to as holding on to assets. Investing is basically similar to renting money because the person who owns that money does not intend to keep it in his/her control forever. It is simply a temporary arrangement to meet current needs until the conditions warrant a change in that asset or security.
The purpose of investing is to make money by buying and selling securities or assets that are considered to be low risk. Low risk investments as a rule are defined as those where the expected returns are higher than the risk or price of those securities or assets. In other words to invest implies to put money into an investment with the objective of gaining a return or an appreciating asset value over a set period of time. Investments can be made in stocks, bonds, mortgage backed securities and in foreign exchange traded instruments. Stocks are sold in exchanges where they trade for a fixed price (the price in which the stock trades). A bond is typically issued by issuing companies as a debt instrument; it pays interest as a result of periodic payments to the holders and is traded on exchanges.
A mortgage-backed securities product is a type of security that provides mortgage lenders the ability to sell a specific percentage of their mortgage notes to investors at a specified date in the future for a pre-determined value. Foreign exchange traded instruments are financial products that trade in global shares of equity between entities. These instruments are traded for their market value on exchanges that are open to all participants. For a low-risk investment opportunity and good returns, investing in stocks, bonds, and foreign exchange traded instruments are ideal.