Investment Opportunity

Companies and governments issue financial instruments to raise short term and long term funds so as to meet their immediate requirements. The financial instruments comprise stocks and bonds, which serve as investment opportunities that can earn high returns. Before opting for an investment opportunity, it is important to do a comparative analysis and identify the segments that are risky but yielding the maximum returns. You can also seek professional expertise from an investment advisor to explore various investment opportunities.

 

Companies and governments issue financial instruments to raise short term and long term funds so as to meet their immediate requirements. The financial instruments comprise stocks and bonds, which serve as investment opportunities that can earn high returns. Before opting for an investment opportunity, it is important to do a comparative analysis and identify the segments that are risky but yielding the maximum returns. You can also seek professional expertise from an investment advisor to explore various investment opportunities.

 

Investment Opportunity: Types

Stocks: An individual who invests in the stocks of a company is equivalent to having an ownership stake in it. That ownership stake in the company is directly proportionate to the number of stocks the person holds. These stocks are also referred as shares or equities. A stockholder receives a share of the company’s earnings and the right to vote in some of the company’s major decisions. Investing in stocks must be done with the awareness that there is no guarantee on the returns. Stock prices fluctuate throughout the day on the basis of various factors, such as demand and supply, economic environment and company fundamentals. These price fluctuations have heightened the interest in pursuing investment opportunities in the stock market.

Bonds: Bonds are also called debt securities that individuals can buy to earn a regular interest income. The investors receive an invested amount back from the issuer of bonds (usually state governments, municipalities and large organizations). This happens at a time when bonds reach maturity and are tradable on stock exchanges. However, the selling price depends on the prevailing market interest rates.

Exchange Traded Funds (ETFs): Just like stocks, exchange-traded funds (ETFs) are traded on stock exchanges. They are index funds that hold various assets at their net asset value (NAV). ETFs also track major stock indexes, such as Dow Jones Industrial Average, Standard & Poor’s 500 Index and Nasdaq Composite. You can invest in the ETFs that consist of underlying assets like stocks, gold, oil, real estate and bonds. Through ETFs, it is possible to enhance the investment yield of your portfolio.

Futures: Futures involves the sale and purchase of an asset, particularly commodities, stocks and bonds, at a pre-specified price. This type of contract closes on the exchange date that is specified in the agreement. Investing in futures can yield huge profits if the market price of the underlying assets slips significantly below the sale price. However, this type of investment opportunity involves high risk. Futures are preferred by both investors who are averse to risk (hedgers) and also those who like to take risks (speculators).

Options: Similar to futures contracts, options are financial agreements that take place between a seller and buyer of an asset. It lets a buyer with an option to purchase an asset at a specified price on a specified date. However, he/she can choose not to exercise it. The assets under agreement may include stocks, futures and property.

Currency market (Foreign exchange market): This is a platform where one can invest in currencies of various nations. The currency exchange values fluctuate throughout the day and provide both investors and traders with excellent opportunities to make profits.

Investment opportunities are numerous but new investors are advised to consider the risks involved before taking any decisions.