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The world of investing can be a confusing place for most, especially when you consider that multiple investment avenues are available, including stocks, bonds, mutual funds, real estate, and other vehicles. That is why it is important to know what kind of information you will need to make your decision, as well as when it may be better to hire others to help you. This article covers a few of the most popular investment options available to you.
Ownership investment is a strategy that enables you to own a piece of a company or other assets including stock, real estate, or a small business. This strategy is not without risk, but has the potential for greater returns than other "safer" investments and can be very profitable as long as you diversify your assets. Stocks represent shares of ownership in a company and can be purchased through a brokerage firm or sometimes directly from the company itself. Owning and managing real estate is another way to build wealth but does require more diligence. Business ownership is another means of investment which can have big rewards if you are passionate and willing to take on the big risks and potential hardships that can come with entrepreneurship. However, you also have the option to be less involved by investing in someone else's business start-up.
Another popular type of investment strategy is to make what are known as lending investments. The most well-known type of lending investment is placing your money in a savings account or certificate of deposit (CD) through your bank. Your bank can loan out the money you place there and in return you gain some interest. This is often thought of as a "safe" investment, however, you will not build capital very quickly on the small amount of interest which is offered. Bonds are another form of lending investment which will yield a predictable return after a specified amount of time; often small, but usually larger than a savings account.
Another type of investment is the cash equivalent. A cash equivalent is any investment that you can quickly convert to cash at no cost to you. Money market funds are an example of a cash equivalent, as are short-term government bonds.
Gold, silver and other precious metals are stable investments which often provide a good return for investors during times of economic instability. Precious metals are only available in limited quantities and as such hold intrinsic value. Paper money, on the other hand, is subject to inflation because more can easily be printed.
With all the investment choices out there, it is imperative to do your research and consult with an experienced financial planner if you are unsure of the best investment strategies for your needs.
Investing-related organizations include the Securities Industry and Financial Markets Association, the National Association of Investors, and the American Association of Individual Investors, as well as other, more specialized or localized, organizations.
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