Different Types of Investments

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Many people are not aware that there are three different kinds of investments. These are stocks, bonds and cash. As simple as it may sound, it is not so as each investment has many other sub-investments under its realm.

The stock market with all its pitfalls can be scary place for those investors who do not know too much about how a stock market functions. This should not scare you as the Internet is a good resource for information and based on the type of investor you are, you can get information. Investors are primarily of three types — conservative, moderate and aggressive. Based on the kind of investor you are, you can invest either in high risk investments or low risk investments.

People who are conservative prefer to invest in cash form of investments. This means that they are the investors who will have interest bearing savings accounts, or they will invest their money into mutual funds, CDs or Treasury bills. These sorts of investments are safe and carry a low risk.

Moderate investors take chances with cash and bonds. Some might also try their luck in the stock market but they will usually opt for investments that have either low risk or moderate risk. It has been seen that many moderate investors prefer to invest in real estate that has low risk attached to it.

Aggressive investors will usually opt for high risk stock market. They will invest their money in business ventures and high risk real estate. A good example of high risk real estate would be investing your money in an old apartment building; renovating the property with the expectation that you will be able to rent out the apartments for more than what they are currently worth.

It is imperative that you learn the different types of investments before you start investment. You should also know what to expect from an investment and the risks involved.

Source by Pauline Go

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