TYPES OF INVESTMENT

TYPES OF INVESTMENT

Stocks: Stocks are an equity investment that represents part ownership in a corporation and entitles you to part of that corporation’s earnings and assets. Common stock gives shareholders voting rights but no guarantee of dividend payments. When you buy stock, you buy a piece of the company and any rights that go along with partial ownership. The way to make a profit with stocks is to buy low and sell high or to receive stock dividends. Stocks can be quite risky.

Bonds: Bonds are loans, or IOUs, but you serve as the bank. You loan your money to a company, a city, the government – and they promise to pay you back in full, with regular interest payments. A city may sell bonds to raise money to build a bridge, while the federal government issues bonds to finance its spiraling debts. When you invest in bonds, you are actually lending money, usually to a government agency. Bonds are much less risky than stocks.

Real Estate: Real estate investment is the type of investment that generates income or is otherwise intended for investment purposes rather than as a primary residence. It is common for investors to own multiple pieces of real estate, one of which serves as a primary residence, while the others are used to generate rental income and profits through price appreciation. When you invest in real estate, you may be purchasing with the intent to re-sell at a profit, or you may be buying property to use as rental property. Traditionally considered a sound investment, the real estate market is currently a buyer’s market, so real estate investing is trickier right now.

Foreign Currency: The Forex market is a currency-trading market that is open all the time and accessible via the Internet. With Forex, you trade currency pairs for other currency pairs in the hope that you will trade for currency that has more value.

Mutual Funds: A mutual fund is a professionally-managed trust that pools the savings of many investors and invests them in securities like stocks, bonds, short-term money market instruments and commodities such as precious metals. ‘Mutual Fund’ An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets.

Certificates of Deposit: ‘Certificate Of Deposit – CD’ A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate and can be issued in any denomination. CDs are generally issued by commercial banks and are insured by the FDIC.

Insurance: Some people choose to use life insurance as an investment. Many policies have investment properties, and an insurance agent or financial advisor can help you choose the right one.

Savings Accounts: Savings accounts offer very little return; in fact, although they are technically a form of investment, they barely qualify anymore. They are certainly a very good way to teach your kids the process of saving, however.

Of course there are other different forms of investment, such as investing in a start up company or some other form of business. But as you can see a variety of types of investment can add spice to your financial future.