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Investing

Written By
Paul Tracy
Updated January 9, 2021

What is Investing?

Investing is the strategic purchase or sale of assets in order to produce income or capital gains.

How Does Investing Work?

Investing can involve the purchase or sale of stocks, bonds, mutual funds, interest-bearing accounts, land, derivatives, real estate, artwork, old comic books, jewelry or anything else an investor believes will produce income (usually in the form of interest or rents) or become worth more.

Why Does Investing Matter?

The safety of the principal is of concern in any investing activity, although some investors are more risk tolerant than others and are thus more willing to lose some of their principal in return for the chance of generating a higher profit. The investor's ability to tolerate risk and the incremental return associated with increasing amounts of risk are two primary factors that distinguish types of investing and help determine appropriate investments for a given investor.

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