There are many types of investments available in today investing environment.  We can’t cover all of them on this page, however, we will cover the basic types of investments.  This will give you some generalized knowledge and a basic understanding of the different types of investments that are available in todays market.  On this page you will learn about six general categories of investments. They are cash investments, stocks, bonds, annuities, mutual funds and real estate.

Cash Investments

In addition to being referred to as a cash investment, an investment that has the potential to be easily turned into cash is also often called a liquid investment.  These types of investments can be made in a variety of different forms of interest bearing accounts that are commonly offered by banks, which include but are not limited to, Money Market Accounts, and Certificates of Deposit.  The benefit of making this type of investment is that despite the fact that they often produce a lower rate of return, they are less risky due to the fact that they are FDIC-insured.

Stocks

Stocks are essentially representations of how much of a particular corporation you own.  Although stocks are a riskier types of investments due to frequent and uncertain market fluctuations, there is an advantage offered by this type of investment.  Being that you own stock in a particular corporation you have the authority to sell your stocks and make a profit at any time.  Profits come from the company in the form of dividends when the company is profiting.  Selling your stocks will mean realizing capital gangs and ultimately income.

Bonds

Two different types of bonds fall under the considerably broad umbrella of bonds, which include the well-known savings bond or Treasury Bond, and bonds offered by private corporations, which are corporate bonds.  Because savings bonds are backed by good ole’ Uncle Sam, (a.k.a. The U.S. Government), and because under most circumstances these types of bonds represent a significantly secure investment, the U.S. Treasury issues more savings bonds than any other institution.  Savings bond purchases can be made both directly through the Treasury Department by going online and they can be purchased at almost any bank.  The benefit of savings bonds is that they are relatively safe and they provide the bearer with a fixed interest rate.

An alternative to purchasing government bonds is to purchase corporate bonds, which are another common investment choice.  Under normal circumstances, an investor can assess the risk of purchasing a corporate bond from an issuer by taking into consideration the risk rating determined by an independent agency.  These types of investments are relatively safe as well but carry a little bit more risk than government bonds due to the fact that they are associated with private corporations, which have the potential to go under due to bankruptcy or some other negative financial situation.

 Annuities

Annuities essentially amount to basic contracting principles.  Someone who invests in an annuity pays a specific amount, in one lump sum, to the issuer of the annuity.  Insurance companies are most often issuers of annuities.  The annuity will then mature at a pre-determined date, which is commonly upon retirement age, and then after that date the investor will begin receiving fixed monthly payments.  During the time the investor is paying into the annuity, taxes do not have to be paid.  Although annuity issuers tend to charge considerably high fees, and success depends on the insurance company and its success and reputation, these types of investments are considered a relatively low risk.

Mutual Funds

A large group of various financial investments, including but not limited to stocks and bonds, are referred to as mutual funds.  Professional investors are in charge of managing them.  The fact that an investor can diversify his or her financial investment over a large pool of different investments is the main advantage of investing in mutual funds.  The unfortunate thing about this type of investment is that it is difficult to determine the level of risk and the rate of return is never set in stone.  Success will mostly depend on the skills of the individual managing the mutual fund.

Real Estate

Another viable financial investment, for those that follow the real estate market, involves the buying, selling, and even renting, of real property.  Investors have the option of buying property and earning rental income, but can also reap capital gains by investing in the right piece of property.  An investor that purchases a property at the right price can often make a nice profit, even after renovation and maintenance costs.  These types of investments are considered to be some of the most solid available because you have cash flow, appreciation, and depreciation and write offs, most of which are not available with the other types of investments listed here.

More

These are just the basic types of investments. There are subcategories of these investments as well and this page is just meant as a guideline to give you some ideas. You should always do more research and decide which types of investments are right for you and your investing strategies.