An Investor is someone who assigns capital with the hope of earning an immediate financial return on that capital. The types of investments available are varied and are categorized according to their expected returns, risk and/or their marketability. The most popular types of investments are:
Equity: A company’s shares are sold by the owner in an effort to raise funds for its growth. One type of investment is referred to as common equity. Common equity includes any shares of stock owned by the company. Common equity can be in the form of shares of stock in the company itself or through stock companies such as Pink Sheet. Some common equity is held by large companies such as Microsoft, Bank of America, and GE.
Debt Securities: A loan is a security against the future payment of money borrowed by the owner of the security. Debt securities include notes, stocks, bonds, and mortgages. These securities are sometimes referred to as secured debt securities. Secured debt securities can also include property, land, or a combination of these. The risk in investing in debt securities is that the value of the asset is subject to adverse changes in interest rates or economic conditions.
Real Estate: An investment is often made in real estate as the owner invests in a piece of property that has the potential to earn an income. Most real estate owners make their profits by renting out their real estate. This profit margin is reduced for investors who own commercial real estate. Many times the amount of rent earned is less than the total costs associated with maintaining the property.
Currency: Currency exchanges and other money transactions are all conducted on the foreign exchange market. Currency is often referred to as the foreign exchange market because it is an international marketplace where two or more countries’ currencies are exchanged. This market is very volatile and can be impacted by factors such as political turmoil, economic conditions, and other outside forces.
Commodity: A commodity is a product that has an inherent value and is used in commerce. Commodity investments range from agricultural products such as wheat, rice, corn, and dairy, to raw materials such as steel, gold, petroleum, and copper. There are many types of commodities and it is important to understand the types of investments you should be making and the market you are entering into before making a commitment to buy or sell a commodity.
Bond: A bond is usually a fixed-rate mortgage with a period of maturity and is issued by an agency for an amount of money and has the interest paid over the course of the duration of the mortgage period. A bond typically has a stated interest rate, term, and repayment schedule. It can be either a certificate of deposit (CD), I Bonds, or a certificate of equity (COE). A bond is a common choice for many private investors. Bond yields interest, however, are higher than savings accounts and usually not as flexible as savings accounts.
Fund: A Fund is an account with a fixed amount of money held by a financial institution. Funds are usually invested in the stock market, government securities, or private equity.
An Investor has to evaluate his/her circumstances and objectives before investing. Some types of investments are riskier than others, so it is important to do your homework and thoroughly investigate any investment. Before committing to investing, one should also take stock of one’s financial portfolio and determine what needs to be improved and which can be neglected. For example, some investments require high levels of investment capital, while others are more suited to small amounts of capital. An investor should also look into the current market environment before deciding which type of investment will work best for them.
There are many types of investment funds available for investors to choose from. The most popular investment funds are high yield bonds, CDs, I Bonds, IRAs, mutual funds, and certificates of deposits. All types of investment funds have their own risks and rewards and should be assessed and evaluated. The type of investor should also consider the age and maturity stage of the fund.
One must also perform the proper research when investing to ensure that the investment chosen is a good fit. Researching and doing proper research are essential to investing for success. When researching an investment, it is important to know what you are investing in and how you will make profits and/or losses. To be a successful investor, it is important to have knowledge and expertise regarding the chosen investment.