Basically, there are three types of investments which are stocks, bonds, and cash. These types of investment can sound simple at first glance. Unfortunately, these investments can get a little complicated. Stocks, bonds, and cash are broad categories for different type of investments that fall under each term.
There is a lot to learn about each type of investment. Also, the stock market can be overwhelming for a first time investor. You will need to learn information that’s related towards a certain type of investment depending on your investing style. An investor will fall into one of the three categories which are conservative, moderate, and aggressive. Also, the different kinds of investments will be under two levels of risk tolerance which are high risk and low risk.
Conservative investors will invest their money into cash. Investing into cash means investing money into interest bearing savings accounts, mutual funds, money market accounts, US Treasury bills, and Certificates of Deposit. Conservative investors are looking for long term investments and will keep their money in that investment until a financial investment is met. These types of investments are low risk investments and will grow over a period of time.
Moderate investors will invest in bonds, cash, and the stock market. The moderate investor will do a little investing in the stock market but nothing too risky. Moderate investors will take low and moderate risks. Also, moderate investors will invest in low risk real estate properties.
Aggressive investors will do the majority in their investing in the stock market. The stock market is a very high risk investment. Aggressive investors will also invest in business ventures and high risk real estate. For example, an aggressive investor will buy an old apartment building and use money to renovate the property. This is a risky investment. An aggressive investor will expect to rent the property out at a higher price or flip the building for more money. Real estate is an investment that can be profitable depending on the market. Investing into an apartment can sometimes be a good investment and at other times a risk.
It is important to learn about the different types of investments before investing. Also, you should decide on which investment to use and make money. You will need to understand the risks of investing and research the past trends of a company. Moreover, you should never invest any money that you can not afford to lose.