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Investment refers to purchasing products and services forfuture gains of an individual, a family unit, or an institution. Though these products and services are not purchased forimmediate consumption, they have the potential to create higherfuture returns for the investor. There are various types of products and services available inthe financial market to benefit from the capital investments. Some of the products and services that can be used as aninstrument for getting personal financial returns are: bankproducts, bonds, stocks, investment funds, annuities, educationalinvestments, insurance, retirement plans, and so on.
Byadopting a wise investment strategy and by adopting adiversified investment portfolio, the returns can be maximizedand the financial goals can be achieved for both long-term andshort-term tenure. The short-term financial plan is adopted for short termmonetary gains, wherein the returns can be expected within ayear that is attributed with low-profit and low-risk factors. Examples of the short-term financial plans include Savingsaccount investments, fixed deposit scheme, money market funds.
On the contrary, a long-term financial plan can be adopted forlong term monetary gains, wherein the duration of the plancan extend for more than year. Generally, the short-termassets/products are sold in the market after the maturityperiod, which provides good returns for the investor. However, the long-term assets/products are held in the investor'spossession that can earn returns in the form of dividends, interest as declared in the financial market.
While there are various type of investments available in themarket to gain profitable returns, many types of risks prevailwhile adapting the personal investment plan. These risks can bemitigated by availing some of the insurance coverage bonds. For example, an individual's life can be covered through lifeinsurance coverage, a vehicle asset of an individual can becovered through an automobile insurance coverage, and aretirement plan of an individual can be covered throughlong-term care insurance.
Further, due to the volatile nature of the financial market, it isimportant to understand the various types of investment plansavailable in the market and the kind of profitable returns thatcan be expected by adapting the investment plans. Some of thewell-known investors who have succeeded in the financialinvestment market for a long-time, such as Warren Buffet, Edward O. Thorp have attributed their success for adoptinglong-term investment plans with due diligence.
Hence, anyindividual, business unit, or a family must be well-versed in themoney management principles to meet the financialrequirements and goals for a long-term.