Investments

Introduction
An investment is anything you put energy into, expecting a return.  A return is something you get after making an investment.  Some investments have high risk.  A risk is the loss of the energy you put in the investment, sometimes more. The higher the risk the higher the reward potentially.  It is not a guarantee you will gain or loss in an investment.  A financial investment is the same as the above definition, but with money.  There are many different forms of financial investments.  They are called securities also known as financial instruments. There are 3 types: debt, equity, and derivatives.  Financial investments are a wonderful way to secure your financial future.  Before you invest, make out an investment plan.  An IP is a written document that consists of goals, strategies, savings, risk tolerance, liquidity amount, etc.

History
Financial investments started in the 17th century.  The New York Stock Exchange was created in 1792. Investment banks were created in the 1800's.  Banks sold a lot of bonds during the civil war, so the government could wage it.  There was a long depression in 1873 because the US and Germany gave up the silver standard.  The Dow Jones was created in 1884.  Federal Reserve was created in 1913.  They are the central bank of the US.  They are sinister and shouldn't exist.  They put the US more in debt because it enriches their shareholders.  The great depression caused people to lose their money in their banks because of the bad decisions investments banks made.  The Glass-Steagall Act separated commercial banks from investments banks. Commercial banks hold money.  Investment banks hold securities. Clinton removed some provisions of The Glass-Steagall Act.  The repeal of some of those provisions probably had something to do with the housing bubble.  Nasdaq was the first electronic stock market.

Types of Investments
Debt Security: It's a debt instrument bought and sold by two entities.  Debt instruments are a obligation by a company that allows them to get funds by promising to pay back the lender.  Bonds, CDs, and notes are the most popular debt instruments.  There are government bonds, corporate bonds, and municipal bonds.  The government bonds are loans the government sells.  The buyer gets the interest as long as he/she have the bond.  When it matures he/ she gets their money back. Government bonds of the US are a sure thing but they are more volatile (up and down) in other countries.  US government bonds are low risk/ low return. Corporate bonds are loans sold by corporations.  They have a higher risk than government bonds, but they have the potential of higher returns.  They are higher risk because they are less stable than governments. Municipal bonds are loans sold by state governments.  They aren't taxed.  Bonds revenue increase as interest rates drop.  Certificate of Deposit (CD)  is a saving account that has a lot of interest.  Notes are pieces of loans.  When you buy them you become a lender.  When the borrower pays the loan every month you get a piece of the action.  There are the mortgage, retirement, and other notes.  They seem very lucrative.

Equity Security: It's the stock market.  Stocks are a part of a corporation.  You can get paid from selling stock.  That's called capital gains.  You could also get dividends.  Dividends are payments shareholders receive just from having stock.  The market determines how much you'll get.  There are 2 main kinds of stock. They are common stock and preferred stock.  With common stock, you own part of the corporation.  You get one vote in the selection of the board of directors.  Preferred stock is also a part of the corporation, but the shareholder doesn't have a vote.  They get dividends forever!   As long as they got the stock.

Derivatives: A security whose value is determined by the price of an asset.  They are traded over the counter or on the exchange.  Futures, Forward Contracts, Swaps, Options, and Credit Derivative are types of derivatives.  Futures an agreement to sell a security at a certain price in the future.  They are traded on the exchange.  Forward are like futures but are sold over the counter.   Swaps are an agreement between 2 people on loan terms.  Options trading is speculating if a stock will rise or fall.  This has low risk and high return.

Diversification
You diversify your portfolio.  That simply means having assets in different asset classes.  There are various asset classes.  It goes from low risk/low return to high risk/high return.  Real estate is in the middle. Diversification protects you from a bear market or any other economic downturn.

Conclusion
Investments are the best way to make $.  There is so much to choose from.  I like options and notes.  Get into it and get rich.

References
https://en.wikipedia.org/wiki/Security_(finance)
http://www.investopedia.com/
http://www.washingtonsblog.com/2013/12/federal-reserve-system-causes-unpayable-debt-unemployment-inflation-high-interest-rates.html
http://www.michaeljournal.org/fedreserve.htm
http://www.accuplan.net/investment-history.htm
http://www.globalresearch.ca/who-owns-the-federal-reserve-bank-and-why-is-it-shrouded-in-myths-and-mysteries/5496873
https://www.lendingclub.com/
Investment Plan
IP2