Fundamentals of investing

Note: All price related data is fetched from everycoinprice.com

investments
Photo by Towfiqu barbhuiya on Unsplash

Investing your money into an asset is done with the aim of multiplying your initial investments many folds and make more money in return.

But as we know, this isn’t always the case

There are broadly only two types of investments

  1. Debt
  2. Equity

Debt is when you loan out some amount of money in exchange for interest paid on return of that money by the other party

This is low risk fixed/low reward. Yet some people prefer this because of guaranteed returns(usual returns <10%)

Equity is when you take part and invest into something that is usually early stage sometimes in big corporates, in exchange of ownership of that particular asset. The aim is to either sell that asset at a later date for a higher price and make higher returns. This is high risk, high return as the owned assets could increase or decrease in price at a later date. The motivation of this approach is high returns, usually <20%. Sometimes event +50%

Cryptocurrency has recently changed this landscape totally. As the returns now range from +100% to +5000% for some cryptocurrencies in a matter of few months to 1–2 years. This has lead to new range of millionaires and billionaires who made smart investments into these cryptocurrencies and received tenfold returns on selling their owned cryptocurrency assets.

Not financial advice

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