1NVESTS

Buying shares of a stock grants part ownership of the corporation, also known as equity. Earnings largely depend on how well the corporation is performing and are made through dividends or by selling your shares for more than you bought them for (capital gains). The price of stock tends to fluctuate in a cyclical manner but generally trends upward.

• High reward potential

• High risk

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Investment funds involve a number of people buying shares in a company that pools together the money to use on a portfolio of investments. Different types of investment funds invest in different areas and have different features, two common categories being mutual funds and exchange-traded funds (ETFs).

 

Mutual funds offer their shares directly to the public and may employ either passive or active management.  Index funds, a type of mutual fund, demonstrate passive management by investing in indexes such as the Dow Jones or S&P 500 to simply stay with the market, whereas other mutual funds may use active management and try to "beat" the market with a team of professionals. Actively managed funds tend to have higher fees than those passively managed. The details on the strategies, management, etc. of a mutual fund can be found in the prospectus.

• Medium reward potential

• Low risk

 

 

 

 

 

 

 

 

 

 

 

 

ETFs are similar to mutual funds except the shares are traded like stock on stock exchanges.

• Medium reward potential

• Medium risk

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchasing a bond is akin to giving a loan to that entity, whether it is a corporation, state/city government, or the national government. Earnings are fixed and paid as interest over the specified term until the bond matures and the principal is repaid. Bonds can be traded, and its value may depreciate due to inflation.

• Low reward potential

• Low risk

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Storing money in a bank account is one of the safest options for investing, as your money is FDIC insured. Banks offer a variety of options including savings accounts and certificates of deposit (CDs).

 

Savings accounts are deposit accounts that pay interest on the amount invested, and the high flexibility and liquidity allow for easy access to that money.

• Low reward potential

• Low risk

 

CDs pay a higher interest rate compared to savings accounts at the cost of much lower liquidity. Access to the invested funds is restricted until the maturity date, much like a bond, although early withdrawal is usually possible with a fee.

• Medium reward potential

• Low risk