In this article I will simply write points, summarizing the elements of investments..
Real assets create wealth, and financial assets represent claims to parts or all of that wealth.
For example, a real asset is a house or a boat that you own, and a financial asset is holding claims (stocks) in a business like McDonalds or Walmart.
Financial assets can be categorized as fixed income, equity income, or derivative instruments.
A financial asset with fixed income is a bond.
You only receive a guaranteed fixed amount of income over the period of your investment (so long as the company is financially healthy and is able to pay all its investors, but we will get into that another time).
Competition in a financial market leads to a risk return trade off.
By this I mean that securities that offer higher expected rates of return also come with a higher expected rate of risk.
If you are quite young and you are investing, then you can afford to purchase securities with higher than expected risk, whereas a senior citizen who is retired might need to think twice before purchasing those same securities.
There are four types of financial markets.
These are direct search markets, brokered markets, auction markets, and dealer markets.
I have discussed these financial markets in a previous article, feel free to read that as well.
Finally, there are recent trends that have evolved all the financial markets over the world.
These trends are globalization, securitization, financial engineering of assets, and growth of information and computer networks.