An investment is the placement of money with hopes of an increase in value over time. Investing often comes with a higher risk than an ordinary savings account, but could also come with higher rewards.
Stocks, or shares, are parts of a company. An owner of a share is technically a part owner of the company. Stocks are issued as a way of raising money for the company, and the value is decided by the market. Meaning that there must be a buyer for every sold share.
There are two ways of making money trading stocks:
1. Buy and hold on to your shares, take part of the company gains by collecting dividends
2. Buy stocks low and sell them for a higher price
Many banks offer their own mutual funds, a collection of stocks managed by an expert. Investing in mutual funds is a way of spreading your risks without having to pick the different stocks yourself. Since they are managed they come with percentage fee, be aware that this fee can be upwards of 2%.
When you have a clear savings goal you’ll know how it’ll take to save for it. Whether it's a protective buffer, next year's vacation funds or the down payment for an apartment, the goal may feel a little smaller once you have figured out how long it will take and what it requires from you.
There are more or less risk involved in saving, depending on which way you choose. When talking about risk we mean the risk of your money losing value. If you choose to save your money on a regular account, there's no risk of a decrease. But the value won't increase either. On the stock market however, you are buying equity, and the risks of a decrease in value is greater. But so are the chances of an increase in value.
Crypto-currency is digital money based on encrypted information and a shared ledger. The ledger shows every transaction since the beginning of the block chain. Crypto coins have value and purchasing power in the same way as “real”, fiat, currencies. However since there is no central controlling entity, the price is completely decided by supply and demand. Read more about the terms you might encounter >