Different Types of Investments
Overall, there are three different kinds of investments. These include stocks,
bonds, and cash. Sounds simple, right? Well, unfortunately, it gets very
complicated from there. You see, each type of investment has numerous types of
investments that fall under it.
There is quite a bit to learn about each different investment type. The stock
market can be a big scary place for those who know little or nothing about
investing. Fortunately, the amount of information that you need to learn has a
direct relation to the type of investor that you are. There are also three types
of investors: conservative, moderate, and aggressive. The different types of
investments also cater to the two levels of risk tolerance: high risk and low
risk.
Conservative investors often invest in cash. This means that they put their
money in interest bearing savings accounts, money market accounts, mutual funds,
US Treasury bills, and Certificates of Deposit. These are very safe investments
that grow over a long period of time. These are also low risk investments.
Moderate investors often invest in cash and bonds, and may dabble in the stock
market. Moderate investing may be low or moderate risks. Moderate investors
often also invest in real estate, providing that it is low risk real estate.
Aggressive investors commonly do most of their investing in the stock market,
which is higher risk. They also tend to invest in business ventures as well as
higher risk real estate. For instance, if an aggressive investor puts his or her
money into an older apartment building, then invests more money renovating the
property, they are running a risk. They expect to be able to rent the apartments
out for more money than the apartments are currently worth – or to sell the
entire property for a profit on their initial investments. In some cases, this
works out just fine, and in other cases, it doesn’t. It’s a risk.
Before you start investing, it is very important that you learn about the
different types of investments, and what those investments can do for you.
Understand the risks involved, and pay attention to past trends as well. History
does indeed repeat itself, and investors know this first hand!
