Do you know the different types of investment you can make? by Matthew Bettison

There are in principle only three different types of investments.
These are cash, bonds and stocks. Cash is simply holding a deposit account with a cash balance. Bonds are fixed investments where the return is known and guaranteed when you start the investment. Stocks are small parts of companies that are 'listed' on the stock market. The value of these goes up and down - not directly determined by how well the company is doing financially but how well the 'stock market' thinks they are doing.
Although you would imagine if that were all there was to understand then investing for profit would be quite simple. It does however get a lot more complicated!
Each type of investment has a number of different varieties that although similar they can perform quite differently. You really need to understand each investment decision before you get started.
The stock market is a hungry beast for novice investors who don't know enough about investing.
Luckily you don't need to know everything about everything to get started, so long as you study the area you plan to invest in and the style of investment you plan to take.
There are three types of investors: defensive, moderate, and aggressive. This is determined primarily by the level of risk you are comfortable taking and your objective in investing.
Defensive investors often invest in cash. So they will typically put their money in interest bearing savings accounts, money market accounts, mutual funds, US Treasury bills, and Certificates of Deposit. These are very low risk investments that grow slowly over a long period of time. They aren't very exciting but that's the point you don't need to worry about these types of investment.
Moderate investors will generally invest in cash and bonds, but may also invest in the stock market - probably with blue chip companies. Moderate investors may also invest in real estate, providing that it is a low risk deal. Here the goal is to get a reasonable return but not to loose your shirt if things go wrong.
Aggressive investors will probably do most of their investing in the stock market, which is higher risk. They may also invest in business ventures as well as higher risk real estate. Here the rewards can be huge but the risks are high too, you could loose it all and more.
Unless you plan to simple rely on luck it goes without saying that the more risky the investment the more complex the deal is likely to be. Although it could be straightforward you need to put in more effort in order to keep an eye on how your investment is doing.
About the Author
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