All of us need to make investments for a better and brighter future. It is true that money is not everything in life. However, it is also true that it is one of the most important things on which your life and happiness rest and that is why you need to be sure that you always make smart investment plans. With so many available options in the market and newspapers, it can be quite tricky to decide on what is good. This is why you must read ahead to find more information regarding so of the basic types of investment strategies.
- Stocks: I am sure that this one is not something that you are hearing for the first time. It is one of the first options that pops up each time you read about investing or have a discussion on similar lines. All business firms that are public traded, have stocks. These stocks are divided into shares which actually determine the extent of ownership to be exercised and enjoyed in that company. Though it is one of the most common investments, please understand that it is indeed subject to market risks and dynamic market situations.
- Bonds: For those who do not know what bonds are, they are actually in general related to any instrument that is based on the concept of debt. When you buy a bond, it actually means that you have willingly given loan to a company or the state, that is the government. Just like the bank charges interest when they give a loan, here too you charge interest on the bond that you have issues and that is what helps you to earn in the long run. If have a look at it from a general viewpoint, you will see that bonds are actually regarded to be as one of the safest investment options. However, please note that the potential returns that you get on bonds are much smaller that other investment options.
- Annuities: There are two main types of annuities. Firstly, there are fixed annuities and secondly there are variable annuities. In case of the first one, the insurance company gives a guarantee to you regarding the interest and the payout. However, the interest rate can actually alter over time and it is not certain or fixed. In case of the latter, the returns fluctuate along with the stocks and bonds that you have initially picked with your annuity.
- Options: Though this is the last one on our limited list, do not think that there are no other alternatives for you. Options refer to a contract that is set between a buyer and a seller. It is this contract which gives the buyer the right to buy or sell off a security at a particular amount in a set frame of time. This is however just a right and not obligation so there is no pressure. There are also secondary market options that you can read up abut if you feel you wish to invest in them.