Overall, there are three different kinds of investments. These include stocks,
bonds, and cash. Sounds simple, right? Well, unfortunately, it gets very
complicated from there. You see, each type of investment has numerous
types of investments that fall under it.
There is quite a bit to learn about each different investment type. The stock
market can be a big scary place for those who know little or nothing about
investing. Fortunately, the amount of information that you need to learn
has a direct relation to the type of investor that you are. There are also three
types of investors: conservative, moderate, and aggressive. The different
types of investments also cater to the two levels of risk tolerance: high risk
and low risk.
Conservative investors often invest in cash. This means that they put their
money in interest bearing savings accounts, money market accounts, mutual
funds, US Treasury bills, and Certificates of Deposit. These are very safe
investments that grow over a long period of time. These are also low risk
Moderate investors often invest in cash and bonds, and may dabble in the
stock market. Moderate investing may be low or moderate risks. Moderate
investors often also invest in real estate, providing that it is low risk real
Aggressive investors commonly do most of their investing in the stock
market, which is higher risk. They also tend to invest in business ventures
as well as higher risk real estate. For instance, if an aggressive investor puts
his or her money into an older apartment building, then invests more money
renovating the property, they are running a risk. They expect to be able to
rent the apartments out for more money than the apartments are currently
worth – or to sell the entire property for a profit on their initial investments.
In some cases, this works out just fine, and in other cases, it doesn’t. It’s a
Before you start investing, it is very important that you learn about the
different types of investments, and what those investments can do for you.
Understand the risks involved, and pay attention to past trends as well.
History does indeed repeat itself, and investors know this first hand!