There are four main types of investments you can make: cash, bonds, stocks, and mutual funds. Each has different characteristics, risks, and rewards. Cash is a low-risk investment that provides regular income. In addition, cash investments can reduce risk in your investment portfolio. These assets tend to grow in value over time.
The main advantage of shares is that they have higher growth potential. Moreover, they can earn dividends as well. However, the downside of shares is that they are risky. If you aren’t willing to take the risks associated with these assets, then shares aren’t right for you.
Stocks are one of the most popular types of investments. Stocks offer higher returns than any other type of investment, so investing in stocks is a good choice for many people. However, stocks also carry more risk than other types. A company may go out of business, which means that the value of your stock may drop. If you’re predicting that a stock will increase in value, you should consider buying stock options. In case of a stock decline, you’ll lose your money.
Bonds are another low-risk investment. CDs, or certificates of deposit, are issued by banks and earn higher interest rates than savings accounts. The good thing about CDs is that you can sell them when their value rises. You can also buy government bonds, which are debt securities issued by the government. Government bond funds, which are short-term investments, are also risk-free.