The Different Types of Investments
When it comes to investing for your financial future, what is the best investment for you? Well, that is a question that only you can answer. You may prefer short-term gains as opposed to long-term, you may like taking high risk with your investments or you may be a low-risk individual. There are many personal factors that play a part in determining what kind of investment best suits you. And that is why there are many different types of investments, to suit the different types of investors.
When it comes to the various types of investments, they tend to fall into certain categories. I’ve outlined the categories below, along with the type of investment that falls into each category t o help you if need be, get a better understanding of investment types.
Ownership investments are as they say they are; when you invest in something you own that asset that you have bought and you expect it to increase its value over time (the time frame depends on various factors) for example:
the most obvious of ownership investments is your own business. Millions of people around the world start their own business for many different reasons, but ultimately it is for ownership investment. They produce a service or product with the aim of making a profit.
You buy stocks (also referred to as shares or equity) in a company, meaning you now own a part of the company. The amount you own depends on the number of stocks you buy. You expect the value of those stocks to go up over time, and the length of time you hold on to these stocks, along with the profitability of the company, will determine the growth of the stocks.
Real estate is another ownership investment. I’m not talking about buying a home to live in, although that too can come under ownership investment once you pay off your mortgage, but I am referring to buying property to either flip or rent out. You buy a property, renovate it and sell it for a profit, or rent it out for a monthly residual income, either way, real estate falls into this category.
You will of course gathered from the home page that I have put emphasis on precious metals investment. Gold and silver, platinum, even diamonds and anything else that can be classified as precious such as works of art and high-value collectables, fall into the ownership investment bracket. You have a tangible object that over time you want to see increase in value so that you get a return on your investment
The second category of investment types is lending investments. This is when you actually buy a debt with the view of being paid back, with some profit, but not a lot. These types of investments are naturally seen as low reward investments because they have a very low risk associated with them, so if you are someone who likes to take little risk investment wise, then this category would suit you.
The types of investments that fall within this category are the following:
CD‘s – a CD or certificate of profit is where you are issued a promise note from your bank in exchange for your investment. Unlike a savings account where you can take your money out whenever you want, having a CD means you keep your money in the investment for a agreed and set period of time. The longer you leave your money in the CD, the higher the interest you earn. Again this type of investment is a very low-risk investment because the return is also very low.
Next you have bonds. I’m not going to go into detail here about what bonds are or how they work, because I have a designated page for bonds, as you can see from the navigation to the side. But the reason why bonds are a great investment, even if they too are low risk, is because as I have mentioned on numerous other pages, investing properly and effectively is about diversification and investing in bonds is a great way to help diversify your investment portfolio.
Fund investments are basically a group of similar investment grouped together. So for example, you may want to invest in reality, precious metals and bonds. All of these can be grouped together in a fund. You may have a fund that is solely made up of stocks, but you diversify your stocks by investing in different industry types such as renewable energy, manufacturing, construction and banking and so on. How the fund is made up is determined by what you want to invest in, your risk type and return you want to look for.
You will see to the side I have a section designated to mutual and hedge funds, along with stocks to give you a better understanding of what all the different investment types are and mean.