The basic types of investments

Category: Investments

Happy Woman Holding Piggybank

If you’re thinking about investing for the first time, whether it’s just a small amount of cash or a large sum of money, you may be unsure about where to begin. There are so many different ways to invest your money, so it can be beneficial to know more about the basic types of investment options:

Stocks

When you invest in stocks, you become a part owner of the company you’re purchasing stocks in. Any profits you receive through stock investments are known as dividends. The value of stocks will often fluctuate day to day. In a sense, it’s like a gamble—you may never make a profit, you might break even, or you might make a lot of money if the stocks increase substantially in valuable.

Bonds

When you buy bonds, essentially you are lending cash to to a business or government. For doing so, you receive interest on the money they borrowed, in addition to the initial amount you lent out.

The biggest appeal about this type of investment is that they carry less risk than others, especially if you’re purchasing bonds from a reliable source. However, due to their safety and reliability, they often produce little return.

Real estate

Property is another popular way to earn some extra income, with investors making cash a few different ways. One way you can potentially profit from a real estate investment is by purchasing a home at a low cost and then “flipping it” for a profit. You might be able to find a home worth investing in by exploring short sales or foreclosures for sale, or you might buy a home that needs renovations from top to bottom, fix it up, and then sell it for a profit. Another common way to invest in real estate is to buy a home for the sole purpose of becoming a landlord. You might want to lease out the home as a vacation property or just as a traditional rental home.

Mutual funds

A mutual fund is a collection of bonds and stocks. When you invest in mutual funds, you are pooling your cash with other investors, which allow you (as part of a group) to pay a professional manager to choose certain securities for you. Mutual funds are all structured with a designated goal in mind, and their distinctive concentration can be almost anything: small or large stocks, bonds businesses or governments, and so on. The main benefit of a mutual fund is that you can invest cash without the experience or time that is usually necessary when selecting a sound investment, but there are also disadvantages to consider.

Cash equivalent investments

Examples of cash equivalent investments include money market funds, certificates of deposit (CDs), and savings accounts. These types of investments protect the initial amount of money you put in, and lets you access it as needed. They’re more reliable investment types, but due to their low return rate, are often not suitable for long-term investment goals.

Whether you need cash to make an investment, start a new business, or eliminate debts, we can help. At Peachtree Financial Solutions, we help payment stream recipients get their money now through the sale of their future payments. If you’re receiving annuity or structured settlement payments, contact us today to learn how you can sell some or all of those payments and receive a lump sum of cash now.

Nothing above is meant to provide financial or tax advice. You should meet with appropriate professionals for such services.

Tags: bonds, Buying a Home, real estate, stocks

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