What are the two categories of investment? Explain them.
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The two main categories of investment are:
Financial Investments:These involve investing in financial assets such as stocks, bonds, mutual funds, exchange-traded funds (ETFs), and derivatives. Financial investments typically offer the potential for capital appreciation, dividends, interest income, or a combination of these.
Real Assets Investments:These involve investing in tangible assets such as real estate, commodities (like gold or oil), precious metals, and physical infrastructure (like roads, bridges, or utilities). Real assets investments can provide income through rent, lease payments, or resource extraction, as well as potential capital appreciation over time.
Investment is classified into 2 categories:
1. Current investment:- refers to investment which is readily realisable by its nature and has intention to hold for not more than 1 year.
2. Long term investment:- which is other than current investment and has intention to hold more than 1 year.