Investing refers to the transfer of money from one entity to another with the purpose of creating or increasing the value of that entity. To invest is also to put money into an entity with the intention of creating an advantage in return/profit in the future. Simply put, to invest in the stock market means buying stock or an asset with the intention of making an income from the capital invested; the profit/profit created from such investment is usually an increase in the price/value of that asset over a specific period of time, known as a margin. When the value of that particular asset increases, then the individual investors who bought their shares/stock at the higher price will reap the benefit.
Investing also refers to the creation of financial instruments that serve the dual purpose of short and long term investment. Examples of these financial instruments are derivatives (which represent both actual and future value of an asset), forward contracts (a contract for the sale of an asset at a later date for a definite price), swap agreements and swap notes. These financial instruments can be used by individuals, companies, institutions and even governments. In the United States, real estate investing is considered as one of the most preferred ways of investing in residential and commercial properties. Examples of real estate include apartment buildings, retail stores, condos, tax liens, lease agreements, bank owned developments, manufacturing facilities, warehouses, manufacturing stocks, land trusts, vacant land and other assets.
As an investor you need to understand the risk/reward profile of an investment and the process of creating an investment portfolio, selecting investment objectives, identifying risk management techniques, monitoring investment performance and diversifying your portfolio. You should also be aware of various share trading strategies, including short and long term stock options, penny stocks, alternative investments, structured settlements, venture capitalists and private equity. Most importantly, you should learn how to manage your money effectively. For this, you should learn how to develop an investment management plan, manage your investment funds and monitor your returns on investment.