Investment products can be a great way to make the most of your finances and help your money work harder for you over the long-term. However, it can often be difficult to know where to start and understand the different types of investments and how they work.
There are a few main types of investment products to consider and this article is designed to help you gain a better understanding on how each one works and what might be the right fit for you when considering your long-term financial goals.
Stocks
Stocks are perhaps the most popular form of investment and are from companies listed on a stock exchange. Investing in stocks can be a great way to make money over the long-term, with the potential for greater returns than other types of investments; however, it can also be considered higher risk with more volatility. When considering stocks, you could either choose to invest directly in a particular stock or invest in a variety of stocks through products such as mutual funds.
Bonds
Bonds are debt instruments issued by governments or companies to raise money and pay lenders a fixed rate of interest. When you invest in bonds, you are providing a loan to the issuer which needs to be repaid over time. Generally, the greater the risk associated with an issuer, the higher the interest rate the bond will offer. Bond investments tend to be less volatile than stock investments, but provide a more lower-risk option.
Collectibles
Collectibles such as art, coins, antiques, and stamps are another type of investment product and can encompass a variety of different collectable items. It is important to remember that collectibles are higher risk and illiquid investments, meaning it can be difficult to sell quickly if required.
Real Estate
Investing in property for either rental or capital gain purposes can be a great way to make money over the long-term. Real estate investments can range from individual properties, REITs (real estate investment trusts) or investment funds, allowing investors to gain exposure to a variety of different property types around the world. It is important to remember that investing in real estate will involve a combination of short-term and long-term capital investments, and will likely require ongoing maintenance expenses.
In Summary
There are a number of investment products available to investors, each with their own risks, benefits and strategies. Ultimately, it is important to take into account your financial goals, experience, risk appetite and liquidity needs when considering any investment product. Researching the products you are interested in, talking to a financial adviser and fully understanding what you are investing in can all help you make an informed decision.