In general now there are only three different types of investments. They are stocks, bonds, and cash. It sounds very simple, right? Fine, unluckily, it gets start very complications from here. You will astonish to see, each type of investment have various types of investments that falls under this.
The stock market can be a full-size frightening place for those who unaware of it or knows something about investing. There is to a certain extent to learn about each different investment type. Fortunately, the information that you require to learn has a shortest relation to the investor which you are. There are also three types of investors: conservative, moderate, and aggressive. The types of funds are also divided into the two levels of risk tolerance called high risk and low risk.
Conservative investors often invest in cash in order to make savings through the interest bearing savings accounts, money market accounts, mutual funds, US Treasury bills, and Certificates of Deposit. These are some of safe investments that mature over a long period of time. These are also known as low risk investments.
Moderate investing may be low risks. Moderate investors often invest in cash and bonds to make double in the stock market. They also invest in real estate, providing that it is low risk real estate.
Aggressive investors like to invest in the stock market, which is higher risk. They also are responsible to invest in business ventures as well as higher risk real estate. For example if an aggressive investor puts money into an older apartment building, then invests more money renovating the property. They expect the rent of the apartments to make more money than the current worth of apartments or to sell the entire property for a profit on the initial investments. In some cases, this works out just fine, and in some cases it is a risk.
State and local Governments also distribute bonds. Unlike bonds released by the federal government, these bonds usually have higher interest rates. This is since the State Department and Local Governments could certainly go bankrupt – unlike the federal government.
State and Local Government bonds are free from income taxes – even on the interest. State and local taxes may be able to surrender. Tax-free Municipal Bonds are common State and Local Government Bonds.
Purchasing foreign bonds is really very difficult, and is often done as part of a mutual fund. It is often very risky to invest in foreign countries. The secured type of bond is to buy the bond issued by the US Government.
The interest may be a bit lesser, but again, there is little or no risk involved. For best results, when a bond reaches maturity, reinvest it into another bond.
Before you set up investments, it is very important that you should learn about the different types of investments, and what those investments can do for you. Recognize the risks involved, and pay attention. History does indeed repeat itself, and investors know this first hand!
Ranju Kumar is a experienced marketer and he has a great experience in this field. He brings you a compilation of all the gems gathered from the best of the best. For more information visit Basics Of Investing and gain more knowledge on Investing.