Investing, in short, is putting your money in an item, person or company because you believe it will generate a profit. If you believe an asset will increase in value over time, you can invest your money into it. Investments are made into assets, like stocks, bonds, and real estate. If you invest in an asset, and over time, it increases in value, you can sell your investment and make a profit (the difference between the purchase price and the sale price).
You can invest in companies, like Apple and Microsoft, or in physical items, like gold or land. An asset increases in value for many reasons. It can be due to an increase in demand or an increase in its rarity. Assets increase in price for hundreds of reasons, some being rational, and others making no sense.
Most likely, when you think of investing, you think of stocks. This is for good reason. Stocks have provided significant profits throughout history, and tend to be generally risk-free. Many people today have investments in the stock market. I’ll discuss what stocks are, and why they're so popular in a later article.
People invest for many different reasons. Some do it so their money will grow over time, others do it so their money is safe. Stocks, bonds, and other similar investments are rarely ever physical, so in case of a fire, earthquake, or other natural disaster, nothing will happen to them. These investments also can’t be physically stolen.
In short, investing is a method of supporting a company, person, or asset. By investing in safe and prudent investments, you can keep your money safe while growing it at the same time.