When one invests in shares, it means that one is buying a part of that particular company - meaning one owns a part of that company. Depending on the choice of the company and how they perform, this can be a good investment or a bad investment. If the company doesn't perform well and loses money, as a shareholder you share the loss in the proportion of the number of shares you have. There are on the other hand shares of companies which are stable, these are called blue chip companies, such as Commonwealth Bank. In general a company with a chance of high return on investment will have high risk of loss as well. With blue chip companies, the return will not be huge but there is less chance of losing money.
While investing in shares, it is possible to buy shares of diverse companies to spread one's investment into a variety of different areas of companies to reduce the risk of losing. With shares, it is also effortless to change your choices. Shares are known as a liquid asset, it is very easy to find buyers or sellers at market price. At any point there would be hundreds of customers interested in buying blue chip shares, compared to selling a property where you may only have one or two interested customers,Blue chip shares would also provide dividend based on the portion of profit company shares with shareholders. When selling or buying shares, brokerage services must also be taken into consideration, these services can be pricey and when making little profit it may not be worth it.
Investing in Bank Deposits.
There are two main types of bank deposits, Savings account and Term Deposit. Savings account allows one to simply store their money from jobs and for day to day usage purposes. The Savings accounts usually provide very low to no interest rates. Term deposits on the other hand provide higher interest rates in comparison to Savings account, however it is still not a large sum of money.
