While stocks are a popular choice when it comes to wealth-building, there are many other investment options you can look at and consider.
In investing, you need to have a well-diversified portfolio that includes assets that align with your financial goals, timeline, and risk tolerance.
Here are six assets you need to add to your investment portfolio:
Stocks are an integral part of investing. By buying stocks or equities, you obtain some ownership in a publicly traded company. And as that company grows and generates more profits, you should see your shares’ value increase over time.
To hold stocks, you first need to have an account. You can open a tax-advantaged account, such as an individual retirement account (IRA) or a taxable brokerage account.
Once you have your account, you can decide which stocks to invest in. To help you decide, here are four popular types of stocks available in the market that you can take advantage of:
Bonds are fixed-income securities issued by companies, governments, or other organizations to raise funds. They are debt instruments, representing loans made to the issuer. So when you purchase a bond, you’re providing a loan to the issuer in exchange for interest payments.
Once the bond reaches maturity, the issuer should be able to pay your initial investment money back to you.
Compared to stocks, bonds carry less risk, although their potential returns are also lower. Moreover, the inverse relationship bonds have with interest rates can make them less or more valuable.
Higher interest rates can weaken investors’ interest in a bond’s lower fixed interest rate, leading its price down. Conversely, if interest rates fall, a bond’s fixed interest rates become more attractive, resulting in stronger demand and a surge in its price.
You can buy bonds directly from an issuer or via a brokerage account.
A mutual fund is pooled money from investors used to invest in stocks, bonds, or other securities. Its portfolio is then handled and operated by professional money managers.
Mutual funds have less risk than individual stocks, and opting for such an investment vehicle provides you with instant diversification. That’s because investing in a mutual fund allows you to hold many stocks and other securities simultaneously.
You can also purchase mutual funds through a brokerage account.
Mutual funds can be classified into the following:
Cash in investing does not strictly refer to bills and coins. Instead, it means cash investments known as cash equivalents which are short-term securities considered the safest and most liquid investment in a portfolio.
If you have short-term financial goals or need money soon, holding cash equivalents can help you. In addition, they are popular with retired individuals that prefer to shoulder less risk.
Common cash investments are as follows:
To invest in cash equivalents, you can find banks that support investing in them or go to the TreasuryDirect website to buy them. You can also look for brokerage firms that offer brokered CD accounts.
Derivatives are financial contracts that derive their values from an underlying asset. This instrument can be used to bet on the future price of an asset or hedge against losses. However, investing in derivatives carry significant risk and may not be suitable for the typical retail investor due to their complex nature.
Derivatives are classified into three types:
Cryptocurrencies have garnered a lot of attention and interest as an investment, with Bitcoin becoming the world’s largest crypto by market capitalization and Ethereum following closely.
However, cryptocurrencies are known to be risky and volatile, with the potential for big upward and downward movements over the short term. Furthermore, such assets are not regulated like how stocks and bonds are.
Still, that may change as governments consider exercising further regulation of the crypto space.
You can invest in cryptocurrencies through a crypto exchange, where most buying and selling of these digital currencies currently occur.
Roblox stock slid after the firm announced its Q1 data, which missed estimates and had…
On Thursday, TikTok revealed it partnered with Content Credentials to classify artificial intelligence (AI) content…
Oil prices extended gains on Friday and were on track for a positive week as…
On Wednesday, tech experts revealed that the new high-end Huawei Pura 70 smartphone series contains…
AMC Entertainment stock maintains, surpassing the first quarter’s estimates, but expects a lower Q2 than…
Robinhood's first-quarter cryptocurrency revenue soared by 232% to $126 million despite potential regulatory hurdles. The…
This website uses cookies.