HOW TO INVEST IN FOREIGN EXCHANGE MARKET
I will like to talk about investment. Well, you may have an understanding of what investment means but let me open your eye of understanding Aa bit more.
Financial Investment is money committed or property acquired for future income (Business Dictionary)
When money or property is committed for future income, it means to set aside a certain amount of money in response to purchasing a requisition and expect the money to grow in a period of time, for an individual to have an extra income at the end to level up lifestyle. for a better understanding take a look at this below.
If for example your yearly income is said to be $5000 and $3000 is set aside to purchase a land property or to buy a company shares and you allow it to grow for a certain period of time, this is said to be an investment.
There is a various aspect of investment in which you can invest to make extra income to cater for other things. We are going to be looking at the financial aspect of it.
Financial Market is a place where individuals are involved in any kind of financial transaction refers to the financial market. A financial market is a platform where buyers and sellers are involved in the sale and purchase of financial products such as mutual funds, bonds, stock, commodity, forex etc.
Types of a Financial Market
A capital market is said to be a market where individuals invest for a longer duration which is more than a year is called a capital market. In a capital market diverse financial institutions raise money from individuals and invest it for a longer period.
Capital Market is divided into
- Primary and
- Secondary market
Primary Market is a form of market where diverse companies issued out stock and bonds to investors in the form of IPO’s (Initial Public Offering).
A secondary market is a form of capital market where stocks and securities which have been previously issued are bought and sold.
TYPES OF CAPITAL MARKET
The stock market is where share public listed companies are traded, also known as the equity market. The stock market is in two main sections,
1. Primary market and
2. Secondary market.
The primary market is where new issues are first sold through initial public offerings (IPOs). Institutional investors typically purchase most of these shares from investment banks.
The worth of the company going public and the number of shares issued will determine the opening price of the IPO stock. All subsequent trading happens in the secondary market, where participants include both institutional and individual investors. A company uses the money raised from its IPO to extend itself, but once its stock starts trading, it does not receive funds from the buying and selling of its shares.
BOND MARKET (DEBT or CREDIT MARKET )
The bond market is where debt securities are issued and traded. The bond market primarily includes government-issued securities and corporate debt securities, and it facilitates the transfer of capital from savers to the issuers or organizations that require capital for government projects, business expansions and ongoing operations. The bond market is also referred to as the debt or credit market. Although the bond market appears complex, it is really driven by the same risk and return tradeoffs as the stock market.
Most trading in the bond market occur over the counter through organized electronic trading networks and it is composed of primary market (through which debt securities are issued and sold by borrowers to lenders) and the secondary market (through which investors buy and sell previously issued debt securities among themselves). Although the stock market often commands more media attention, the bond market is actually many times bigger and is vital to the ongoing operation of the public and private.