Investing? Here Are 4 Types of Investments That You Should Know About!
12 May 2020
Almost half of all households hold some type of stock. Despite this, the richest 10 percent of households control 84 percent of the total value of these stocks.
There’s a massive disparity between who holds the wealth and everyone else. But there are several types of investments you can still use to help you build your financial success.
So what do the wealthy do? These are the four most common types of investments you should consider for your financial portfolio.
When you buy a stock, you buy a piece of the company. There are several different ways you can invest in stocks. You can opt to buy stocks individually, like specifically picking stocks like Tesla, Netflix, Apple, or Amazon for example. When you do that, you buy a share of the company.
People like to pick individual stocks like this because they like to invest in companies that matter to them. They also see how these big-name companies have grown and may believe that growth will continue.
You can also try to time the market, where you try to buy low and sell high to make a quick profit. While this is possible, it’s very risky and very difficult. Generally, it’s a safer choice to buy and hold.
The third way is through index funds like the NASDAQ or S&P 500. With these, you buy all the stocks in the index fund. The idea is that some will do great, some will do alright, and some will epically fail. But hopefully, the gains outweigh the losses.
Bonds are issued by governments and corporations when they want to raise money. They’re essentially a loan that will get paid back. You can also receive interest on bonds once they reach maturity, usually twice a year.
Real estate is a common investment. Traditionally, prices have gone up. So when you buy today, it’ll likely be worth more in just a few years. You can also flip real estate, or rent it out to make money.
Even if you don’t have money, you can still invest. You can invest in a real estate investment trust (REIT) if you haven’t saved up to buy a house. This way you can invest in real estate without a lot of money.
High Yield Saving Account
If you’re risk-averse but have a good chunk of money, it’s worth considering a high-yield savings account. So long as the bank is FDIC insured, your money will keep making money at essentially no risk. But make sure it keeps up with inflation.
These Are the Four Most Common Types of Investments
These are the four most common types of investments. Each one works differently and has different pros and cons and levels of risk.
Just because you see great results from one type of investment doesn’t mean you’ll automatically be good at another. Since each investment acts differently, take the time to learn the market before fully diving in.
Ready to start investing and make your money work for you? Contact us today to find out how we can help you reach your financial goals.