What is Investing?

First of all, let's define what investing means.

It can include buying financial instruments, which we will discover shortly.

Why to Invest?

Investing is useful for several reasons:

• Investing enables individuals and organizations to grow their wealth over time, essentially earning additional income;

• Investments can generate a steady stream of income without requiring active effort;

• Investments support economic growth by providing capital for businesses to expand, create jobs, improve infrastructure, and more.

Common Types of Investments

Considering assets for investing, the most common are:

However, it's important to note that investing always carries a risk.

Investing in a single asset is relatively simple but carries considerable risk.

However, by spreading investments across multiple assets — a process known as diversification — the investment process becomes more complex but also significantly reduces risk.

We will delve deeper into diversification in the upcoming chapters, covering how to compute essential components and select the most effective diversification strategies using Python.