An investment is the purchase of an asset (or rights to an asset) to try to get a return. When you save with your bank or building society your capital is protected and not exposed to any risk, you can even guarantee your returns when using a fixed rate bond.
Investments are different, they are for the longer-term and your capital will normally be at risk. This means you could potentially not receive any return on the money you have invested or lose some, or even all, of your initial investment, however the potential for better returns than saving with a bank or building society is significantly greater. Different types pf investment include:
- Shares – these are shares in a company which give you part ownership of the company, with the potential to receive a regular income by way of a dividend or to benefit due to an increase int he share's value over time when they can be sold to generate a profit. You can invest in shares directly or via an investment fund.
- You can also choose to invest in investment funds such as Unit Trust or Open Ended Investment Company (OEIC) that select the companies on your behalf with the aim of paying you a return
- Investment property – you invest in buying physical property and then gain a return by renting these out or develop them to improve their sale value
- Fixed interest securities or bonds – these are a loan/investment made to a government or a company and you can earn a fixed interest return. These are known as stocks.
Other types of investments include your pension, such as a self-invested personal pension, investment ISAs, structured deposits, endowments and investing in gold. You can also invest in antiques, art, wine and in start-up companies through crowd funding sites.
