Overall, there are three different kinds of investments. These are bonds, cash, and stock. Sounds simple enough? Not really because it gets complicated from there. With each type of investment, there are numerous types of investments.
There is quite a bit to learn about each different investment type. Those who hardly know anything about investing will find the stock market as a scary place. When it comes to the amount of information you need to learn, it's directly related to the type of investor you are. Conservative, moderate, and aggressive are the 3 types of investors. The different types of investments also cater to the two levels of risk tolerance: high risk and low risk.
Conservative investors 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. Over a long period of time, these safe investments would grow. Also, they're 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.
Most of the investments of aggressive investors are done 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. They could rent the apartments out for more money that what it's worth or sell the entire property for a profit on their initial investments. In some cases, this wouldn't work but in others, it would work just fine. It's definitely a risk.
Before you start investing, it is very important that you learn about the different types of investments, and what those 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!
There is quite a bit to learn about each different investment type. Those who hardly know anything about investing will find the stock market as a scary place. When it comes to the amount of information you need to learn, it's directly related to the type of investor you are. Conservative, moderate, and aggressive are the 3 types of investors. The different types of investments also cater to the two levels of risk tolerance: high risk and low risk.
Conservative investors 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. Over a long period of time, these safe investments would grow. Also, they're 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.
Most of the investments of aggressive investors are done 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. They could rent the apartments out for more money that what it's worth or sell the entire property for a profit on their initial investments. In some cases, this wouldn't work but in others, it would work just fine. It's definitely a risk.
Before you start investing, it is very important that you learn about the different types of investments, and what those 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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