What Are The Benefits Of Different Investment Types?

Whether you’re looking to build your wealth, or simply trying to beat the bank’s interest rate, how and where you invest can make a huge difference when making an investment.

Here are some major assets that are currently on the market, and how you can use them as investment tools…

Stocks

Stocks are the most basic and widely understood asset. A stock represents a share of a company. AKA a part of the total ownership of it.

The better the company does, the higher the value its stocks will be. The worse it does, the lower the value drops. As such, investing in stocks is particularly high risk, but also offers high rewards.

If you do invest in stocks, then it is always worth paying attention to business news to develop an insight for companies on the up, and which of them might be showing signs of decline.

Bonds

Bonds are fixed-income securities that are issued by bodies such as governments and corporations. When you’re buying a bond, you are lending money to the issuer of the bond. That money is then used to fund projects.

When the funding is paid back, you get your bonds back. Bonds do not offer the same levels of income as stocks, but they are a lot safer in most cases.

However, rising interest rates can cause existing bonds to become less valuable, so it’s worth looking at what direction the interest rate is going when you buy them.

Property

When investing in property, you are investing in something tangible. This can make them seem like a more reliable prospect to most people.

Property tends to be a fairly sturdy market, but like most investments, prices rise and fall. So make sure you study the market before buying.

It can be expensive to buy properties on your own, which sees people putting their money into things like REITs, instead.

This allows them to pool their money with other investors to own part of a property, rather than the whole of it. However, this does split and reduce your potential gains.

Crypto

One of the newer entries on the market, cryptocurrency has been grabbing headlines ever since Bitcoin first arrived on the market.

Initially proposed as (and still expected by some to become) an alternative to existing currencies in transactions, a lot of the value gained in crypto has been speculative, based on the worth that it could potentially have, rather than the worth it does.

As such, crypto enjoyed a large boom that has largely dipped since then, but that doesn’t mean that new crypto opportunities don’t appear routinely. It’s just worth knowing that it’s a very risky market.

Precious metals

Just as crypto is one of the newest assets you can invest in, gold is one of the oldest. Indeed, most currencies used to base their worth on the gold standard.

While they’re not used as widely, now, precious metals, including gold and silver, are still worthwhile investment assets for their ability to retain their value.

Of course, given how widespread they are, care needs to be taken to ensure that you know the difference between real vs fake silver, for instance.

Holding some of your money in precious metals can make you more resistant to economic instability. When the markets fall, precious metals tend to retain their worth.

Forex

A slightly more complex asset than most mentioned here is Forex. When you’re invested in forex, you’re investing in the relationship between two currencies.

If you’re investing in USD>EUR, or the US dollar in Euros for example. The higher the value of US dollars, compared to Euros. The more that your shares in them are going to be worth.

There’s real money to be made in forex trading. However, it requires keeping a very close eye on international economic markets and fiscal policy. 

Understanding the pros and cons of different investment assets can help you be much more mindful about what you’re doing with your money.

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