Looking to start investing your money but not sure which option is best for you? Investing requires discipline and self-education. Start basic by understanding your options, knowing where you are and the goals you want to reach. Investing also requires a level of self-awareness; your comfort with risk, your level of patience, what you’re investing and how much money you have set aside to invest.
These five investment choices are some of the most popular and often the easiest starting options. Be sure to understand each option and select the best, most suitable investment choice for you.
Types of Investments
1. Savings Accounts
If you’re looking for investments that pay you income on an ongoing basis than a savings account might be what you’re looking for. For many, these accounts are easy and convenient ways to store cash because money can be taken out and spent immediately if necessary. These accounts are best for those needing to spend the money within a short period of one to 12 months.
2. Certificates of Deposits (CDs)
Certificate of Deposits are time deposits issued by banks and credit unions that also pay income on an ongoing basis. These are short-term, usually one month to two years, and they pay interest at the end of the term once the CDs mature. CDs often pay a higher rate of interest than savings accounts.
Bonds are loans made by investors to various bond issuers. It’s a form of a debt security or IOUs issued by a corporation or government agency. Bonds are also the best option to raise money for funding projects or large operations. This investment option usually pays a higher interest than CDs and savings accounts as well.
Stocks represent ownership in a corporation. A stock is a share of ownership so the more shares you own, the larger your ownership. As a corporation earns a profit, some of the profit may be passed along to shareowners in the form of dividends. This investment choice is favored by short-term speculators and long-term investors. Over the years, stocks have outperformed every other type of investment.
5. Mutual Funds
Mutual funds are one of the most popular investments because they’re easy to buy and redeem. These funds are pools of money invested into a diversified portfolio of stocks, bonds or other securities. Earnings of the portfolio are paid out to individuals in dividends.
Investing is a lifelong pursuit that can be an intimidating process. Take the time to understand your options, educate yourself on the investing process and be honest with yourself. Successful investing is not accidental.
Ready to Invest?
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