Share Market

There are different types of investment with each having its own level of risk. Risk is inevitable as investment is about taking a risk with your money by investing in assets that could rise or fall in value. Investments are very different from savings as they are typically designed for a longer term and are unstable in nature.

There is one type of investment that helps the investor in building his money. According to your pre-determined goals, it helps you in building money. There is another type of investment that is designed to return the money of the investor pretty efficiently to attain his goals. Investments like Bonds, stocks, mutual funds, and more are common types.

Discuss them in detail below:

Bonds: grouped under general category called fixed-income securities, they are used to refer to securities that are found on debt. While purchasing a bond you are lending your money to a company or the government. The bond in return pays you interest on your money and eventually pays you back your entire original amount. Bonds are safe and virtually guaranteed or risk-free. But, less risk leads to less potential to grow.

Stocks or equities: units that make you a part-owner of a company that you hold stock of. Stocks are volatile but get you dividends whenever your company does well. Many stocks don’t pay dividends, wherein, you can make money only if the stock increases in value.

Mutual funds: collection of stocks and bonds. Buying mutual funds is pooling money with a number of other investors which allows you to choose your own specialty in the funds. These funds can be invested without the time or experience needed to choose a good and stable investment.

There are basically two types of securities or investments: stocks and bonds (equity and debt). While many investments fall into one of these two categories, there are many alternative vehicles. These represent the most complicated types of investing strategies. The alternative investments are Options, Futures, FOREX, Gold, Real Estate, etc.

Once the investing starts, it does not really bother what you invest in. The alternative investments are generally high-risk or high-reward in nature. These securities are much more speculative than stocks and bonds. They make good profits but require some specialized knowledge. Thus, it’s important that the new investors focus on investing in equity and debt rather than trying other options of investment.