Investing is inherently risky. There is no guarantee that you will get the return you expected or even get the original investment back. That is why it is advisable to understand various types of investment options available and their risk vs. reward profile. In general, your reward in any investment is proportional to the risk you are willing to take. The key is to balance the portfolio such that your risk is distributed. In order to determine which would be the best investment option for you, you will first need to understand the characteristics of several types of investments in the market. Below we provide an in depth guide to various types of investments to help you make determination of how they align to you investment objectives.
Stocks
When you are investing on stocks, you are becoming a part owner of that particular business. Not only does it give you the eligibility of raking in the profits that are allotted to the stockholders, you can also attend the meetings of shareholders and participate actively too.
Before investing in stocks, it is very important for you to know that they are highly volatile. You can see the constant fluctuation in their values almost every day. Also, if you choose the stocks which do not pay dividends, then you will have to rely only on their values going up. Wrong speculations will prove to be costly to the investors.
Bonds
Investors, who do not have it in them to take big risks, mostly depend on investments on bonds. In simple words, when you purchase the bonds, you are lending money to a government organization or a private company.
They will keep giving you the interest, according to the terms and conditions decided by them. It will eventually keep earning you profits in the long run. Although investments on bonds are a safer option, the returns on investments are competitively slower, when compared to other aggressive investment opportunities.
Mutual Funds
When you are investing in the mutual funds, the company will use it for investing in a combination of bonds and stocks. Basically, you will become a part of an investment group, and your investment manager will select the investment opportunities on your behalf.
Your investment will be diversified on different opportunities like government bonds, large or small stocks, private company bonds, international bonds, industrial specific stocks, etc. The main advantage of investing in mutual funds is that, you can do so, even if you have little or no experience with investments. You will have an investment manager to handle the securities on your behalf.
In addition to the above mentioned conventional investment opportunities, there also are other alternative investment opportunities, to earn faster returns. Some of them are
- Futures
- Real estate
- Commodities
- Options
- Forex market
Forex market
If you are looking for quicker returns with leverage, then Forex will be your number 1 choice. The major attraction of this market is that it has the potentials of allowing you to get quicker and higher returns on your investments. You will have to sign up for an account with any of the reliable Forex broker to get started.
However, please be reminded that, there are equal chances of you losing money as well. Therefore, you will need to educate yourself with the intricacies of Forex trading before embarking on the journey towards high returns on investment.
