Types of Investments
- Sneha
- Jul 11, 2020
- 2 min read
Investments are a great financial strategy!! For investments, you should use the money that you have set aside, maybe a portion of your non-emergency savings. There’re many ways to invest. To create a profitable investment portfolio, it’s best to learn about different types of investments.
Stocks: This is probably the most well-known one. Publicly traded companies issue stocks, for example, Tesla, Apple, etc. This means that they’re letting people buy a certain percentage of their company’s shares. It’s up to you on how much you invest and in what company. There’s a risk since there’s a chance to lose money.
Bonds: Fixed income securities and they’re usually issued by a company or government. It’s like you’re loaning out some of your money. There’s a stated interest rate so that means there’s a stream of income. It’s not as volatile as stocks.
Mutual Fund: A portfolio of investments that investors can buys shares of. The advantage is that the fund is managed professionally. Since it’s a portfolio of different investments, there’s less risk as compared to individual stocks
Commodities: Physical goods that you can purchase, like gold, silver, or even coal. There is a risk because you don’t know when the price can go down. There are many factors that influence the prices of commodities.
CD (Certificate of Deposit): The investor gives a certain amount of money to a bank or a credit union. Upon the maturity date, the investor gets their money back with interest. This is a low-risk investment but if you need to withdraw the money before maturity there is a penalty.
Annuities: A contract with an insurance company. The investor pays a certain amount and gets a certain income periodically. These are usually used to supplement retirement savings. A disadvantage is that they are taxed like income.
These are just 6 types of investments, but there’re many more. During this time of the coronavirus quarantine, we should make the best out of the situation and try to learn something new!
Comments