For people who are planning to invest their money, it is important to know the choices they have at hand. There are various forms of investments, and each comes with its perks. Bonds, CDs, stocks and equities, and mutual funds are some of the most popular kinds of investment.
Investing in the share market
Investing in Shares or Stocks would mean investing in the shares of a company with high worth. Buying stocks in a company would make you a shareholder, and you will have a share of the profits known as dividends.
Also, the value of stocks keeps changing constantly. Professional investors can perceive in foresight which companies are going to experience an increase in value. One can resale their shares anytime they want. People usually sell their shares when the amount has increased a great deal.
Taking advice from professionals can help newcomers to figure which stocks are sure to witness a growth in value in the coming few years. It’s better to make safe investments, that is, in companies that aren’t likely to lose their worth in a few years (Microsoft or Google, for instance).
Investing In Bonds and CDs
The safest investment for anyone would be in Certificates of Deposits (CDs). These are certificates that one might purchase, and they earn a fixed interest over a given period. Almost all banks sell certificate of Deposits. The period or duration might range from a month to 5 years or so.
Bonds are a little riskier than CDs, but they also earn more returns. The Government mostly sells bonds, but some companies do so as well. The investor initially earns interests on the money they have lent out (by purchasing the bond). The Government/ companies also eventually pay back the actual amount invested.
Mutual funds are interestingly a collection of bonds and shares. Usually, a professional manager (or a company) brings together an assortment of shares and bonds that will pay a rewarding amount of interest and dividend to the investors. They are always subject to market risks. The risk of investing in a particular fund might be very high or minimal. One needs to be aware of the details before investing.
Depending on one’s preference regarding the risk and the urgency to earn more, one can choose the suitable form of investment for themselves.