Variety Really is the Spice of Life: 8 Different Types of Investments
Are you concerned about your financial future? Do you need to put your kids through college a few years down the road? Do you want to retire while you can still do more than rock in a chair? Do you want to ensure your posterity the financial advantages that you lacked while growing up? Do you want to live a reasonably comfortable retirement without a lot of financial worries?
Most people do find themselves in some such situation, and many folks really have no idea how to go about investing their hard-earned money, or even the different types of investments that are available. If your idea of investing involves a piggy-shaped ceramic jar or them underside of a mattress, fear not. You have information about the different types of investments available right at your fingertips.
1. Stocks: 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: When you invest in bonds, you are actually lending money, usually to a government agency. Bonds are much less risky than stocks.
3. Real Estate: 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.
4. 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.
5. Mutual Funds: When you invest in mutual funds, you are joining a group of others who are also investing in the mutual fund. Basically, you and the others share the cost of hiring a professional to manage your assets, and most mutual funds include a variety of different investments, such as high-risk, long-term, short-term, stocks, bonds, and the like.
6. Certificates of Deposit: Certificates of Deposit, or CDs, are similar to savings accounts, except they pay better interest. The reason for the higher interest rate is simple: when you open a CD at your local financial institution, you agree to leave the money there for a set amount of time; generally, the shortest amount of time is six months, but you may agree to a term of one year, two years, or even five years. The longer you agree to keep the CD, the higher the interest rate.
7. 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.
8. 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.
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