Different Types Of Investments And Which Is Right For You

Investing is a part of every person's life. You can make investments in yourself, investments in your business, and investments in your financial life. If you're new to investing and you're not sure where to start things can be very confusing in learning the type of investment vehicle that is best for you. If you'd rather learn than turn your money over to an investment adviser via Edward Jones then here are some different types of investments for you to think about. Don't limit yourself to just one - you can use several to build a well rounded investment portfolio that will serve you well for many years!

Certificates of Deposit (CDs)

A certificate of deposit is one of the safest higher yield investments you can make. Most of the time your money is insured by the bank and the government. A lot of people favor this investment type because they are guaranteed a steady rate of return for a specified amount of years. This could be for as long as 10 years or as little as six months depending on your bank's terms on certificate of deposits.

The downfall of this type of investment is that your money is not liquid and the interest rate will be less than you can get on other things like stocks. Still, many people choose to put at least some money into these for safety and income reasons. This investment option is best for money that you don't see yourself needing in the near future. If you take it out before your CD's expiry you will face steep penalties. You also usually have the option of having the interest deposited into your checking account. If you're looking for additional, safe, and steady income in your retirement this is a viable option for part of your portfolio.

Money Market Accounts

A money market account is basically a savings account with a much higher yield. I've had money market accounts with a yield of as much as 5% before the market drop. While rates have dropped you will most certainly get a better rate than a traditional savings account. Also a fairly safe investment that is very liquid. You can remove your money at any time you wish.

You will probably have a minimum balance requirement for the high interest rate in this account though. It could be several thousands dollars depending on the banking institution. There may be a maximum withdrawal amount every month but if you're keeping cash in a money market you shouldn't need it every day. I use this type of account for a couple things. First, it makes a good emergency account. This keeps money on hand for you to access quickly if your car dies, your air conditioner goes on the fritz, ect. But it makes it harder for you to spend it on things you don't really need!

Secondly I use my money market account to save for bills I only pay once a year. My insurance premiums and my property taxes are taken out of my paycheck and put into this account every month. This means I have the money saved up at the end of the year, I usually get a discount for paying in full (and early!), and there are no surprises to scramble to fix!

Investing In Stocks

Investing in the stock market intimidates many people who have never done it before. They don't know how it works and are scared to lose money. If you don't know how to find good stocks to invest in it's time to do your research! Choosing a good company to put your money in does not have to be hard.

If you are older or have a low risk tolerance you will most likely be investing in high profile companies that will ideally pay you a nice dividend. These types of stocks are time tested and will pay you a reliable income through your golden years. The problem is that most of these companies are already so big there's not much room for growth.

If you're younger and can afford to make some mistakes you can choose some mid cap companies that may have a higher upside potential for you. Not to say you can't do both! A diversified portfolio is the key to financial success.

Investing In Foreign Currency

The currency market is a little confusing. If you're not familiar with investing you should try something else before taking a swing at this. Learning how to trade forex is not for the feint of heart. This investment is essentially betting on how well one currency will do against another one.

If you do want to try forex you should do so with caution. It's easy to lose money quickly in this game. Try registering for a practice paper account with a reputable broker. This way you can trade risk free and practice your skills before putting your own money on the table.

Currency is always traded in pairs. So, if you were to purchase GBP/USD then you would be betting that the pound would go up in value against the US Dollar. Unlike the stock exchange the forex market is open twenty four hours a day - and is much bigger. Every currency in the world is represented here.

Investing In Property

Investing in property is popular with many people because it offers a very high rate of return. Depending on what you spend on the property you can net a return valued at several times that of a traditional investment; if you're renting it. You also get the perks of many beneficial tax write offs, and the ability to own an asset that will most likely appreciate in value over time.

The downsides? It can be time consuming and annoying to be a landlord. Tenants can be difficult, and you'll be responsible for taxes, insurance, and any repairs to the property that you have invested in. As a landlord though it should be noted that all of those expenses can be written off on your taxes! Also, rental income is not subject to self-employment tax which is another reason it's so popular. If you don't want to do it yourself you can always hire a property management company. They typically charge 5-10% of the rental income to screen tenants, collect payments, schedule repairs, handle evictions, ect. I think this is a small price to pay for the service and time save to be honest!

There are many, many other investment options available to you. I may update this hub at a later time to add some more ideas, but I'm out of time for today! Thanks for looking!! Please follow me if you found this useful. :-)