Types of Investments - Economy Simple

The Types of investments

There are several types of investments, some popular while others not so much. Many people use investments to raise capital in order to start up a business, while others use them directly, instead of a business. In any case, Investing should be about money that is left over collecting dust and it is a pity that it does not work for you, generating profit. Never risk your only money and your emergency fund . During an emergency you need to have access to money that are at a loss and wouldn't be smart to withdraw it. By investing money that you know you will not need in the near future, you have the luxury to withdraw it when profitable. The type of investment that each one will follow depends on their capabilities, knowledge and type of character. Economy Simple is available for any kind of help. The table is a guide to popular investments and summarizes their key differences, while below are presented in more detail.

Type	Access	Risk	Return
Drawer	Immediate	Low	None
Bank Deposit Box	1-3 days	Low	None
Savings Accounts	Immediate	Low	0% - 2%
Fixed Term Accounts	Months / Years	Low	0.1% - 3%
Municipal Bonds	Years	Low	2% - 5%
Corporate Bonds	Years	Low / Average	3% - 6%
Gold / Silver	1-3 days	Average	Unpredictable
Stocks	1-3 days	High	Unpredictable
Indices	1-3 days	Average	Unpredictable
S&P 500 (5year)*	Years	Low	8% - 10%
Cryptocurrency	1-3 days	High	Unpredictable
Real Estate	Years	Low	3% - 10%

Drawer
The oldest way was the grandmother's mattress. The option of storing cash in the house, gives you immediate access, which is especially useful for an Emergency Fund . The mattress or the drawer, however, do not reward you at all and additionally include the risk of loss from possible theft or natural disaster.
Bank Deposit Box
The bank safe somewhat restricts the immediacy of access but provides extra security from the savvy. Earnings are zero, but in addition to cash, it can store precious metals as well.
Savings Accounts
Bank deposits were once the first thing that came to mind when hearing of interest rates. Banks now give almost zero rate of up to 0.1%. Security is very good and now only the government can reduce it. Access is perhaps even more convenient than cash and is achieved throughout the ATM network but also online.
Fixed Term Accounts
In case you have the opportunity to lock your money for some time, then the banks will repay you with a slightly higher interest rate. Term interest rates have also fallen, hovering below 1% per year. If you want to break the agreement sooner, you will not lose your capital, but you may lose the interest or part of it.
Municipal Bonds
A bond is a paper for which the issuer is required to pay its face value at the end of a specified period. Government bonds are considered the most secure and safe investments, are issued by governments and are sold through banks. Here again, the capital is locked as there is a penalty clause in case of liquidation before their expiration. Interest rates range from slightly negative up to 2%.
Corporate Bonds
The same applies to corporate bonds as to government bonds, except that the issuer is a private company or a bank. They contain a little more risk than government and for this reason are rewarded with better interest rates of 2% to 5%. You can access them through a stockbroker or the issuer himself. Like government bonds, corporate bonds have a penalty clause in case of liquidation before maturity.
Gold and Silver
Precious metals, especially gold, are the oldest form of trade in our world. Its corrosion resistance and small volume in relation to its weight, make it ideal for storage. Be careful when storing it at home, just a good hiding place is not enough, as there are equiped thieves with metal detectors. Its most recognizable and exchangeable form is the British Sovereign . You can get gold from exchange shops or from banks. Gold usually keeps pace with inflation and does not lose its market value over time. It is noteworthy that it is a safe haven for investors in cases of political instability and uncertainty. You can watch its price at Kitco.
Stocks
In active investing the risk increases considerably, but so do the chances of profit. When you buy shares of a company on the stock exchange, you are essentially buying part of that company. You get the right to collect the profit that corresponds to you (dividend) and the right to compensation in case of its solution. Stock prices change every day due to demand and supply, which makes them highly volatile and prone to news and rumors. It would be wise for such investments to be the result of extensive knowledge and study. They should not be treated as gambling. Professionals of the field can help you in this area. You can access them through your bank or a broker.
Stock Market Indices
Indices are a great way to own multiple companies at the same time (diversification ), without having to buy their shares one by one. This protects you from stock volatility , as the risk is shared among the companies participating in the index. We are more likely to fail by choosing only one company if our money is based on it alone, but it is less probable for 10 companies to fail at the same time. The popular Dow Jones index, for example, includes 30 major American companies. Buying a unit of Dow Jones is like investing in Apple, Coca Cola, IBM, Goldman Shachs, Johnson & Johnson, McDonald's, Microsoft, Nike, Walt Disney, Visa and 20 others at the same time. Thus, putting the eggs in many baskets, it is harder to see a sharp drop but at the same time it is rarer to see a sharp increase. An investor could choose to buy the above shares himself instead of the index. The only difference would be that they would need much more money and also pay more transaction fees. The companies that make the indeces, relieve you from this problem, as well as choose the shares, making the passive investment easier.
S&P 500
The S&P 500 is just the most popular stock index in the world and contains the top 500 companies in the United States, regarding their market capitalization . We immediately understand that this is a very stable index with wide diversification , which tends to be identical with the entire historically upward economy of America. The reason the S&P 500 is mentioned separately is because it is particularly interesting in long-term investments. While from year to year there may be a drop in its value, however in periods of over 5 years there have been no serious losses and in periods over 15 years there are only gains. Historically, from 1970 onwards, any 15 year period had a significant gain. More information: Wikipedia.
Cryptocurrencies
Cryptocurrencies, with Bitcoin being the most popular, are the smallest sibling of the field of investment. They appeared in 2009 and since then have had great success of great volatility . Cryptocurrencies attracted the interest of people, because of the way they are designed. They cannot be controled by only one party and the cannot be inflated. In January 2021, a Bitcoin costs 41,000 US dollars and the total market capitalization of cryptocurrencies exceeds 1 trillion USD. This is a high risk investment, which should be only a small part of your portfolio . More information: Coinmarketcap.
Real Estate
Investing in real estate offers stability and long-term security, as properties tend to retain or increase in value over time. Long-term rentals provide consistent income and require less management, but there is a risk of lower liquidity or difficulty in finding tenants. Short-term rentals can yield higher profits, especially in tourist areas, but they demand more management and are subject to seasonal fluctuations or changes in demand. An investor must consider economic stability, taxation, and market conditions before deciding on either approach.

The Typesof Investments

The Types of investments

Drawer

Bank Deposit Box

Savings Accounts

Fixed Term Accounts

Municipal Bonds

Corporate Bonds

Gold and Silver

Stocks

Stock Market Indices

S&P 500

Cryptocurrencies

Real Estate

The Types
of Investments