An investor is a person who attempts to use assets to generate more assets. Investment ideas are thoughts or plans of how to make this happen. There are numerous ideas that a person may settle on, such as buying stocks or bonds and leasing real estate. In some instances, people's investment plans may result from their own ideas. Others may rely on the services of an investment adviser.
Purchasing stocks is one of the most common investment ideas. Stocks are shares that a company sells, usually, to help generate revenue. Shares are purchased at a certain price, which can fluctuate. When the price increases in a positive direction, each share becomes more valuable than it previously was. The difference between the price at which a person purchased shares and the price at which she sells them is the return on her investment.
People also use bonds for investment. A bond may be issued by a federal government, a municipal government agency, or a corporation. The issuer uses bonds as a means to generate revenue by making the bonds available at a certain price. An investor can earn money this way because the issuer has an obligation to repay the face value of the bond and any interest that it accrues before its maturity date.
Some people's investment ideas lead them to purchase mutual funds. This is an investment strategy that allows numerous individuals to combine their finances to purchase stocks and bonds. Generally, the various investors do not know each other. Their money is usually collected and managed by a professional.
There are several investment ideas that people act on that involve real estate. One of them is operating rental properties. This strategy usually involves the investor purchasing property that she does not plan to use personally. Instead, she will lease the property to people who will have rights to use and access it, but who will not own it. While there is an outstanding mortgage on the property, the rent may or may not cover and exceed these costs, but once the mortgage is paid, the majority of the rent collected should be profit.
Another investment strategy that involves real estate is buying property at one price and selling it for a higher price. To make a profit, some investors simply hold the property until the value raises enough that selling will reap substantial benefits. Other investors buy properties and make changes or improvements that will increase the value and they resell the improved real estate as soon as possible after the completion of each project.
