There are different types of investments that you should take a look at and put your money in.
All of them have their pros and cons. Gold, stock, real estate, options, and stocks are a few examples of investment types. In researching where to put your cash you have probably come across some of these when researching what to do with your money. We know that investing worry a lot of people. There are a lot of options which is why it can be difficult to figure out which investments are right for your portfolio. However, we have prepared this guide to walk you through some different but most common types of investment and explain why you may want to consider including one or more of them in your portfolio. Let’s get on the way!
This is one of the different types of investments that you can put your money in; housing and real estate. Private businesses, trailer parks, apartments and farms are all good if you treat them the same as an investment. The hardest part about real estate investment is getting a property that is 50% off of its worth. If you are able to do that, you can make some good profit investing in real estate.
However, it may just be easier to invest in the stock market, make the same gains or better, and not have to go through having rental properties to take care of.
Stocks may be the most known and simple type of investment. When you purchase stock, you’re purchasing a share of ownership in a publicly traded company. Many of the biggest companies in the world — think Facebook, Apple, and Microsoft — are publicly traded, meaning anybody can purchase stock in them.
When you purchase a stock, you’re hoping that there will be a rise in its price so that you can sell and realize some profit. For this kind of investment, the risk is that the price of stock could drop instead of rise, in which case you’d lose money. Investors buy stocks from brokers. It’s your choice to make if you would either work face-to-face with a broker or opt for an online brokerage firm.
Buying bonds is essentially lending money to an entity. Generally speaking, this is a business or agovernment entity. Companies issue corporate bonds, while local governments issue municipal bonds. The United States Treasury issues treasury bonds. After you’ve held the bond for a stipulated amount of time, you earn back the principal spent plus a determined rate of interest.
Generally, the rate of return for bonds is much lower than it is for stocks, but the former also tend to be lower risk. There is usually some risk involved, of course. The company that sells you a bond could fold, or the government could default. However, rreasury bonds especially, are considered a very safe investment.
Just in case you don’t know, you can invest in gold. But keep in mind that gold is a commodity. Therefore, if you’re investing in gold, bear in mind that your protection against a price drop is based on scarcity and fear. What you’re simply doing investing in gold is betting. You must remember that betting on commodities is usually just that — betting. It is wise to invest when you KNOW that scarcity will create the demand to drive the price.
An option is to an extent, a more complicated way to buy a stock. When you purchase an option, you’re buying the ability to purchase or sell an asset at a certain price at any given time. There are two types of options: put options, for selling options, and call options, for buying assets.
The risk of involved in investing in an option is that value of the stock will decrease . If the stock drops from its initial price, you lose your money. Options are an advanced investing technique, and you have to get approval to participate in the options market.
Some people use annuities as a part of their retirement savings plan. When you purchase an annuity, you buy a contract with an insurance company which enables you get periodic payments in return. The payments may begin anytime, right away or at a specified future date. They may also be for a predetermined period of time, or last until death.
While annuities are fairly low risk, they are not high-growth. They are not a source of funding, so you can put your money in this as a good supplement to retirement savings.
Cryptocurrencies have been around for some years now as an investment option. While the most famous cryptocurrency is bitcoin, there are countless others. Cryptocurrencies are simply digital currencies, and they don’t have any government backing. You can trads them on cryptocurrency exchanges. Some retailers will even allow you make purchases with them.
The major downside of cryptos is that they often have wild fluctuations, and this makes them a very risky investment.
The Bottom Line
There are many types of investment to choose from, and we have provided a good number of them above. Some are good enough for starters, while others require more experience. All the types of investment offer a different level of risk and reward. Investors are advised to consider each type of investment before determining the asset allocation that aligns with their goals.