Overall, there are three different kinds of investments. These include stocks, bonds, and cash. Does it sound simple? Not really because it gets complicated from there. You see, each type of investment has numerous types of investments that fall under it.
When it comes to the different types of investments, there's quite a bit to learn. Those who hardly know anything about investing will find the stock market as a scary place. Fortunately, the amount of information that you need to learn has a direct relation to the type of investor that you are. There are 3 types of investors namely conservative, moderate, and aggressive. The different types of investments also cater to the two levels of risk tolerance: high risk and low risk.
With conservative investors, they often invest in cash. What this means is that their money is placed in interest that bears money market accounts, savings accounts, US Treasury bills, mutual funds, and Certificates of Deposit. These investments are safe and grow over a long period of time. These are also low risk investments.
Moderate investors often invest in cash and bonds, and may dabble in the stock market. The risks in moderate investing are low and moderate. Providing that it's low risk real estate, many investors also invest in them.
Aggressive investors commonly do most of their investing in the stock market, which is higher risk. Higher risk real estate and business ventures are what they also invest in. For instance, if an aggressive investor puts his or her money into an older apartment building, then invests more money renovating the property, they are running a risk. Either they sell the entire property for a profit on their initial investment or they rent the apartments out for more money than the apartments are currently worth. In some cases, this wouldn't work but in others, it would work just fine. It's definitely a risk.
Before you invest, first learn about the types of investments and what these investments can do for you. You should understand the risks that are involved and pay attention to past trends. History does indeed repeat itself, and investors know this first hand!
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