Types of Investments

Types of Investments

When possessing a larger sum of money, many people wonder what is best to do with it. Is it better to deposit it in the bank and let it grow with the interest, should you buy real estate with it and hope the property’s value increases or should the sum be invested? Other people also invest in precious objects like jewelry, art and paintings. What’s certain is that investing is always a good option just as long as you know what you should invest in. For that, one needs to ask for the professional advice of a stock broker or investment adviser. In what follows we’ll present the three major types of investments, as well as some other smaller options.

When it comes to looking at types of investments, the first that comes to mind is the bond. Bonds are found in the category of fixed-income securities and they are founded on debt. Don’t worry, not your debt, but the companies’ you are lending your money to, because that is what bonds are more precisely.

Basically, when you purchase bonds, you are lending some of your money to the company of your choice, or even to the government. What you get back is interest on the money you’ve lent and also, eventually, the sum you’ve invested. Perhaps bonds are among the safest types of investments, especially if you buy from your government – this, of course, if the country’s economy is relatively stable and you can be confident you’ll get your money back. However, due to the fact that it is a safer investment, the interest rates won’t be as high as with other investments. It all depends on what you want to do with your money.

The second type of investment is to buy stocks. This is probably the most popular type of investment, but it can be quite risky even when you know that the company you buy stocks from is stable and turns a profit every year. For stock investments it is best to ask for the advice of a professional who knows about the market and about the companies’ rates on the stock market. When you buy stocks you also become more or less part owner of the business, depending on the percentage of stocks you own. Yet remember that stocks are variable, so you aren’t guaranteed anything; this is an investment you need to tend for almost on a daily basis.

Among all types of investments, the third is the mutual fund, which is a combination, a collection of bonds and stocks which means that someone else will be hired to protect your investment and do your buying and selling for you.