1. Stock or Equities

Stocks and equities are basically the same thing. They’re securities that represent owning a piece of a company. There are also equity mutual funds, which are also in the same class. There are several ways to acquire stocks and/or equities. You can purchase shares of a company through Initial Public Offers (IPO’s). You can buy from a broker and/or brokerage house (i.e. TD Ameritrade). Also, if your company offers a 410K plan, you can buy stocks through their program. What good about owning equities is that they are easily liquidated if you need to raise capitol right away. Their performance is quite volatile and generally give the best returns over the long haul. With the way equities move in value over the short term, in most cases they’re not ideal for short term investing unless you are very active on a daily basis.

2. Fixed Income Securities or Debt Instruments

Securities that will generate return within a period of time fall in this class. Bonds are the most common of them all. Returns are in the form of dividend income and/or interest. Bonds are issued by either the government, a company that want to raise capital to increase their business or a bank fixed deposit. It’s basically a loan to them from you. They can be purchased through corporate bonds, bank fixed deposits or debt mutual funds. They are considered a safer mode of investing since they aren’t as volatile as equities. It is also used by investors to protect their stock portfolio. The yield varies depending on the economic conditions at the time of issuance.

3. Real Estate

I don’t think I really need to explain what real estate is, but to cover all bases, ownership of land, homes, or commercial property are considered real estate. Real estate is sold in the open market by buying land, houses or commercial property, as well as taking ownership through inheritance.
Another way to invest in real estate is through funds that only involve real estate properties. They are known as REIT (Real Estate Investment Trusts). Investing in real estate can bring great rewards. Look at any wealthy person and you will see that they’re investing in real estate. To own rental properties will bring high yield over the long term while the tenant’s rent will (in most cases) cover the mortgage and other monthly expenses.

4. Gold

Again I don’t think there’s any need to explain what gold is other than it is the most sought after precious metal in the world. There was a time that the American dollar was related to gold, referred to as the gold standard. Gold can be purchased through jewelers as well as banks. Once can also invest in gold through gold ETF’s (Exchange Traded Funds) and mutual funds. The benefit of investing in gold is that it has always held it’s value against inflation. It’s not effected by the fluctuations in either the stock market or any currency. Many of the smart investors hold a position in gold to help hedge against the volatility in the markets. Gold will bring high returns over the long period of time.

5. Commodities

Commodities consist of of any type of tangible item that can be bought or sold. Precious metals, base metals, ferrous metals, agricultural products are just some of the many things that are considered a commodity. To invest in these you would need to go through a commodity exchange, such as NYMEX (New York Mercantile Exchange) and the CME (Chicago Mercantile Exchange) to name a few. I don’t recommend a beginner investing in commodities. The risks are very high and unless you have advanced knowledge in this area, I say stick with the equities (stocks) that handle these products.

To properly make it in the stock market, you should have a well balanced portfolio. I suggest that you learn more about each one before investing any of your hard earned cash in the markets. It will help you to seek the advice of a professional before doing any of the things that were discussed here in this post. General questions are always welcomed and I will do my best to answer and help.

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