4 Types of investments (and which one is incomparabl the best)

Many people in life think that the majority of their money will come from their job income. In reality, by investing your money correctly you will be able to earn more from your investments than from your job. While there is a large selection of possible investments, each with their own risks and rewards, I have narrowed that selection to four of the most discussed. Generally, the greater the return on the investment, the higher the risk is.

4. Bonds

Bonds are usually the safest investment that can be made, however it comes with very limited upside. A bonds are sold by government and corporations in order to raise funds for a project. By purchasing a bond, you are basically lending the institution money to perform this project, with the understanding that you will get that money back plus interest. While there are many types of bonds, you can be pretty sure that the higher the interest rate is, the more risk there is.

What it means for investing:

Bonds are a good place to put your money if you cannot tolerate any risk, as it is a fixed income investment. Bonds purchased from the United States are one of the safest, albeit least rewarding, ways to invest your money.

3. Gold

Gold is useful for many things, including wooing pirates and women alike. More importantly, gold has been used as an investment for hundreds of years. To invest in gold, you can either own the physical gold or own virtual shares of gold. These virtual shares are traded like a stock and mimic the value of actual gold.

What it means for investing:

Gold has long been thought of as a safe bet during times when the economy and the government are not looking so hot, and research has generally shown that gold does well when people are worried about the economy. Owning some gold is not a bad idea to diversify your portfolio.

2. Mutual Funds

Simply put, a mutual fund is a fund created by someone who pools together large amounts of money from different people, and invests in various investments. There are many different types of mutual funds, some investing in energy, emerging markets, or even other mutual funds.

What it means for investing:

Investing in a mutual fund is a good way to diversify if you are strapped on cash, however there are often fees taken out of the profits of mutual funds which add up over time. Personally, I think that if you own a fund made up of stocks, you may as well research which stocks in the fund are the best and purchase those specific stocks.

1. Stocks

Investopedia, an online investing encyclopedia, views stocks this way: “This fabulous category of financial instruments is, without a doubt, one of the greatest tools ever invented for building wealth.”  I agree wholeheartedly with this statement and think that when choosing what to invest in, stocks are by far the best choice. A stock is a share of a company, and the price of the stock moves depending on how people value the company that it represents.

What it means for investing:

While many people view stocks as too risky for at home investors, they are truly the best way to build wealth through investing. By both the companies and the stocks, individual investors should have no problem finding safe places for their money, and all investors should at least into investing in stocks.

As always, your feedback is important to me. Please post any advice, critiques, or questions in the comment section below!