Investors can choose from a variety of investment examples, including stocks, bonds, cash equivalents, and commodity futures. Each has its own benefits and risks, so it’s important to understand what each one can do for you before you decide to invest.
In the long run, a well-diversified portfolio is the best way to maximize returns. Diversified funds include index funds, exchange-traded funds (ETFs), and diversified stock funds. These investments have limited risk of short-term volatility, and are usually pegged to the S&P 500.
Investing in commodities is another way to earn a positive return, particularly if you are in the market for speculative trading. Commodities can be traded through commodities futures, ETFs, or commodities options.
Stocks are investments that represent ownership in a company. It is a way for investors to receive dividends and profit from company earnings. They can also be a way for businesses to raise capital.
A bond is a lending instrument. The issuer of the bond pays interest to the bondholders, and repays the original amount borrowed. Bonds have a longer maturity than stocks and are often considered less risky.
Real estate is a traditional investment. Property includes land, buildings, and other rental properties. Real estate is a safe investment, but it can also be volatile. You should research the property before you invest, and be sure that it is suitable for your purposes.
Cash equivalents are investments that are meant to be held for a short period of time. They represent a company’s strength and ability to pay its current debts.