Investing: The Basics I

I have referred to the Investment pages as per the information given on the Commonwealth Bank site, to provide a check list on the basics of investing to start my research on investing on.

There are about four categories, or asset classes. 

• Cash (e.g. money in the bank, bank bills)
• Fixed interest (e.g. government or corporate bonds)
• Property (e.g. residential, commercial or industrial property trusts)
• Shares (e.g. Australian or international shares).

These four asset classes can be separated into two broad groups – defensive investments and growth investments.

Defensive investments

Cash and fixed interest are generally classified as defensive investments. The main features of defensive investments are:

• Aim to provide regular income and do not usually grow in capital value
• Aim to experience only slight fluctuations in investment returns and values over short period.
• Returns are generally lower than those of growth investments over the medium to long term.

Knowing my personality, I personally prefer investments which provide fixed investments which provide regular income, and for starters, am pretty much risk free,
as I do not really want to be bothered with the hassle of checking the 'board" to see if prices have risen, or gone down on a weekly, much less on a daily basis. (Time is money, as they say....)

According to this list:

• Your reasons for investing
• Your performance expectations
• How long you intend to invest (investment time frame)
• Your knowledge of investment markets and past experiences
• How you feel about sudden increases and decreases in the value of your investments.

At my stage in life, my reasons for investing would include that I would be saving towards a goal- i.e. intention of marriage, house and car.
As for performance expectations, due to my low level of risk tolerance, I would rather just let there be a safe haven for my income to be 'stationed' at whilst earning compound interest.

My knowledge of investment markets and past experiences is almost close to nil. My experience with investment has so far been limited to Term Deposits, and compound interest. Safe investment, you may say.

I am, and would not be too happy about the decrease in the value of my investment, like any other person who earns a salary. Who would anyways?

As for investing in a product with a higher risk, I believe that would come with experience. For now, let me continue reading up on this issue before making a decision on what I would do with my salary...