The concept of investing

 What is investment and its types?

The importance of money

Money is the main and necessary element in daily life, for its commercial and practical uses, as it is the basic element of any commercial operation. It is considered the official mediator that contributes to the continuation of life, as it is the element approved by people to buy their needs and daily necessities such as food and its components or other materials such as cars And household tools and other matters of importance. Money consists of types, the first of which is the paper currency, which is widely used at the present time, and the coin and digital currency, and each country uses a type of its own currencies, for there is, for example, the American dollar and the European euro, and money is the main element and basis for the investment of all kinds In this article, we will talk about the concept of investment. 

The concept of investing
The definition of the concept of investment, as the sum of the total quantity value of capital used in the production of a range of services, goods, and materials provided in the custom, as well as markets to a group of property, assets, and shares acquired by individuals to get money, where the investment process By putting an amount of money and investing it in a specific thing such as a business, personal projects, companies or the stock market, and the return on investment is considered a major measure of the performance of companies and institutions at the general economic level, and investment includes two types, namely: Fixed income investment which includes bonds, fixed deposits and stocks And variable income investment, which includes ownership of businesses and personal projects or real estate ownership and fixed buildings.

The investment and economic relationship
The concept of investment depends mainly on the economy. It also contributes very significantly to achieving economic growth for different countries, through the establishment of a set of sound capital investments at the level of business or real estate ownership, which contribute to increasing production, which is the main factor contributing to the rise in output The importance of investment also lies in providing a group of goods and services in the markets, reducing the unemployment rate, increasing national income and contributing to raising the standard of living, and increasing the surplus that contributes to increasing the state’s ability to export abroad, This is to maintain ensuring economic stability and achieving global economic development., the relationship between the economy and investment is considered a coherent relationship, so that the higher the level of investment, the higher the economic growth.

How important is the investment
After getting acquainted with the concept of investment, it must be mentioned that it is the main component in the process of economic development, through which profits and returns are achieved for companies, institutions, and individuals, through the positive effects of increasing income through investment, and there are several benefits for investment. The most important of them are:

  • Providing the various specializations of technicians, administrators, and workers necessary to implement all different practical activities within the country.
  • Providing job opportunities and reducing the unemployment rate among individuals, which contributes to the revitalization and development of the currency.
  • Increasing the rates of capital and material formation of the state, considering that capital is the main component of economic growth.
  • Producing goods and services that satisfy the daily needs of citizens and contribute to stimulating marketing and sales movements for the state.
  • Exporting surplus goods and services abroad, which saves foreign currencies needed to purchase machinery and equipment, and increase capital formation.
  • Providing services to citizens and investors to achieve the best economic and financial results and returns that contribute to raising the level of the state's foreign trade.
  • Increasing production and productivity, which leads to an increase in national income and an increase in the average per capita share of it, thus improving citizens' standard of living and increasing the percentage of per capita income.
Types and methods of investment
The concept of investment varies as it is divided into a group of forms that contribute to achieving high-profit rates and the internal and external economic development of the country. The following is a breakdown of the most important types and methods of investment: 

  • Real estate investment: Real estate investment is one of the most popular investment methods through which a group of commercial real estate is invested, where commercial or residential real estate is bought and sold in addition to residential or agricultural lands, which are bought and sold for the purpose of residential investment or agrarian trade.
  • Investment Funds: they are defined as an investment tool that is managed through the investment manager, whereby investors can invest through stocks, bonds or other investment tools, as investment funds are evaluated at the end of the trading day, and sale transactions are executed And buy shares after the market closes.
  • Stock investment: through which investment is made in international and local stocks, and it is considered a primary component of mutual funds and the stock exchange, in which a group of individuals participates with a specific capital and a certain profit rate.
  • Trade exchange investment: It is called traded funds, and it is defined as an investment instrument that is traded on the stock exchange and during the trading day, unlike mutual funds, which are traded at the end of the investment day.
The negatives and risks of investing
Understanding the concept of investment helps in reaching an understanding that classifying financial risks as a group of risks that lead to the occurrence of an undesirable event, such as the possibility of the company issuing shares losses or a decline in profits or a decline in the market value of these shares, so the investor always wants to increase the market value of his shares. And these risks are represented in the uncertainty of achieving the expected return on investment, and it is the investor's responsibility to work to reduce the risk factors that fall under his control to avoid any losses on profits or investment capital. One of the critical risks that may occur during the investment process is exchange risk Foreign currencies If the saving account currency differs from the local currency of the account holder, there is a risk that the exchange rate will move inappropriately between the two currencies, leading to capital losses. 

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