6 Types of Investment You Should Know

You should keep in mind that buying a car, television, or any possessions is not an investment. Anything that loses its value over time after owning theme can never be considered as investments. There are a lot of investments you can try, but all of these have their own advantages and disadvantages. Investing in bonds, stocks, and other financial products are all good options. The six types of investments below would probably give you the most money if you do thorough research and make the best choice.

 

1. BONDS

Majority of people had experience of investing bonds because they see it safer and easy to invest. Treasury bonds can be seen as risk free asset, since the country rarely fails to pay the bond. However, the lower the risk, the lower the return rate it is. Bonds may only come with a 3 percent return of your money over multiple years. The return rate may only cover inflation’s rate and you would not earn extra fortune though investing bonds. When you take your money out of the bond, you will have less buying power compared to the time when you put it in.

2. STOCK MARKET

Investors who have more investing experience can consider stocks. In the stock market, you can invest in individual companies or stocks. Stock is more risker than bonds. However, it is not the safest and easiest way to make money, it is deemed to be the best way to make a profit.

You can start with the industries that you like and understand. After doing research of the companies in the chosen industries, you may buy the stock and wait for the price to go up. With the stock market, you can have better returns and retire faster compare to any other investment type.

 

3. MUTUAL FUNDS

Instead of choosing promising industries and do the research and analysis all by yourself, you can let someone professional do the work for you. All you need to do is to select a great fund manager and invest in mutual funds he manages. This is a pool of funds from different investors that are spread into various investments. The fund manager would come up with a portfolio of stocks, bonds and other assets. He would analyze the economics and the trends of market to get good returns.
 However, this comes with some downsides. You have to pay a fixed rate of management fee no matter you make positive returns or not. Besides, there are some close-ended funds which mean you cannot withdraw your money within a certain duration of time. You should make arrangement of your liquidity.

4. GOLD

Gold is known to be inflation hedge and this reputation is well-earned. The most obvious manifestation of this significance is the investment value of gold in the era of inflation-banknotes, etc. will depreciate due to inflation, but gold does not. You can surely invest in gold. But you should be aware that betting on commodities is usually just betting and you’re not protected from the price drop. Therefore, investing in bond may not be suitable for everyone. You should keep in mind that scarcity will create a demand for a price hike. It is of great importance that you have knowledge of worldwide economics.

5. REAL ESTATE

Some of you may not be aware of that real estate can also be a good investment. Publicly traded businesses, private businesses, apartments, farms, and trailer parks can become a suitable investment if you chose a propitiate area at a propitiate time. For example, if you brought apartments in New York at 2008 and sell it now, you would make profit. There is an opportunity in investing in real estate. You can make some decent returns if you manage to buy a house that is 50 percent off what it’s worth. If you can do that, then it will become a good investment.
 However, it may be easier to invest in the stock market, since the price of an apartment is much higher than stocks, and you have to deal with retinal maintenance of the apartment.

 

6. Bitcoins

The price of Bitcoins has risen to 20,000 USD dollars recently. Some people believe that Bitcoin is an emerging store of value which is better than gold. However, some believe that Bitcoin is not an effective wealth storage tool because of its volatility. At present, the market's expectations of low global economic growth and high inflation have not changed significantly. Therefore, Bitcoin will continue to increase in the future, and the price will continue to record highs. Investing in Bitcoin is more like speculation. Thus, you should evaluate your financial situation and determine which type of investment above to invest in.

 

(Images from the internet)