Investment essentials are the collection of investment options which work for helping the investor to achieve their goals. It includes bond, cash and stocks, you can invest in it by buying a mutual fund directly or indirectly. While selecting the avenue of investment, match your risk profile with the associated risk of the product because some of the investments are carrying high risk but they have the potential for generating the high returns.
There are different types of investment style available to choose from like mutual funds, individual stocks, ETF’s and bonds.
Different types of investment:
Bond–Bonds are more stable investment as compared to the stocks because they are providing steady flow of money. It is issued for the period of time and providesan interest payment for bond holder. These bonds are subjected to anumber of risks which include interest rate risk, credit risk and re-payment risks.
Stocks – Most of the companies are selling shares of stocks for their growth by raising their money and buyer has the opportunity to participate in the success of company. Hence, there are two types of stocks available such as common stock and preferred stock. In common stock, shareholders have a partnership so they are having the right to vote on the issues related to the company. In preferred stock, they do not vote for the company related issues.
ETF’s –Exchange traded funds are like the mutual fund in many cases, but they are trading on the exchange of the stocks during the days of trading. They are constantly valued when the market is open.
Cash equivalent – These investments are protecting your original investments, you can access your money in saving accounts, certificates of deposit and in money market accounts. These investments are made for long term investment goals.