Many people seek to develop the money in their possession and increase its value over time, so they are keen to apply one of the methods that help them to do so, and the higher the value of the small sums of money, the more satisfied they feel about the financial achievement that has been achieved during a specific time period, usually keen Individuals to choose the easiest means that help them increase the value and volume of money in their possession, and all operations that contribute to the development of money are called investment.
Define investment; The term investment is derived from the word (invested), which means obtaining a benefit from the money, while technically, investment is defined as a means that contributes to developing the value of money and increasing it by relying on the use of one of the investment methods available in the commercial market.
Another definition of investment is that it is a financial tool that contributes to achieving interest and profits that increases the percentage of money saved, but it is not necessarily that the investment is always successful; Because its success depends on the nature of the financial and investment strategy that the investor applies before starting to think about implementing the investment process.
Invest a small amount
Many individuals have relatively small amounts of money, and are looking for a set of ideas that will help them invest and increase them; Any conversion of a small amount into a large amount during a specific period of time, which may be measured in weeks, months, or years.
When the individual succeeds in investing a small amount and converting it to a large amount and then converting it to a larger amount, then he will be able to realize the concept of investment and apply it realistically in a correct manner.
Ways to invest a small amount
To invest $1,000 and convert it into $2,000, one of the methods that help the success of this investment can be applied, namely:
- Bonds: They are a type of securities that carry a variety of financial value, or specific categories of money. Bonds work according to the principle of financial debt; That is, the investor buys the bond and postpones the payment of its price until he sells its value again at an amount higher than the purchase price, thus being able to make a profit from the investment amount, and then invest it again or save it. Example: buying bonds worth 1,000 dollars on a deferred payment period, and then offering them for sale at a value of 1,200 dollars, and when selling them, a profit of 200 dollars is achieved.
- Shares: They are financial shares that are purchased within the capital of companies and institutions that offer part of their shares for trading so that the investor (the shareholder) becomes a party to the owners of companies and institutions, or among the contributors to the growth of capital over time, and profits are usually made through shares. Put it up for trading by selling it. Example: buying shares worth 1,000 dollars, and after days or months of buying them, they are sold at a value of 1,500 dollars when their value increases in the financial market, which contributes to applying the correct concept of investment and achieving financial profits.
- Investment funds: It is a group of financial funds that contain stocks and bonds that investors purchase their contents, and then work on investing them according to their respective fields, and they may be sold later at a price higher than their purchase price, and thus the concept of investment is applied in a correct manner, and usually focuses Investment funds convert the value of bonds and small shares into a large value, in the event that their owner does not want to sell them at a price higher than their purchase price.
- In numerous company sectors, investment is one of the means of financial development.
- Investment is not limited to a specific category of individuals or companies but includes all categories.
- Real assets, such as buildings and vehicles, and financial assets, such as quantities of money and stocks, are the most common forms of assets used in investments.
- Investment is defined as a sort of commitment that adds to the development and expansion of existing resources through time.
The importance of investing
- Investment helps countries increase their domestic production prospects.
- One of the most essential aspects in global economic development is investment.
- Individuals and institutions can generate savings by investing in the province.
- By giving financial support for fresh ideas, investment encourages entrepreneurship.
- Small projects (short-term investment): It is a set of ideas that contribute to achieving a satisfactory income for people and companies, by working to provide capital that contributes to supporting specific ideas during one financial year, and then works on developing and developing them in order to benefit from them. ; Such as small productive projects that start with simple capital, and then amplified with the passage of time. Examples of small projects are projects for making home pickles.
- Insurance (long-term investment): It is one of the important types of investment, which is measured in long years, and insurance is usually divided into two types, namely: insurance related to individuals, and examples of it: life insurance that contributes to providing a sum of money to the individual in the event of exposure to risk, or His family owes him in the event of his death. As for insurance in the field of companies, it contributes to maintaining the development of material assets, especially those that are subject to damage and need updating or replacement over time.