Overall, there are three different kinds of investments.
These include stocks, bonds, and cash. Sounds simple,
right? Well, unfortunately, it gets very complicated from
there. You see, each type of investment has numerous types
of investments that fall under it.

There is quite a bit to learn about each different
investment type. The stock market can be a big scary place
for those who know little or nothing about investing.
Fortunately, the amount of information that you need to
learn has a direct relation to the type of investor that
you are. There are also three types of investors:
conservative, moderate, and aggressive. 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. This means
that they put their money in interest bearing savings
accounts, money market accounts, mutual funds, US Treasury
bills, and Certificates of Deposit. These are very safe
investments that grow over a long period of time. These are
also low risk investments.

Moderate investors often invest in cash and bonds, and may
dabble in the stock market. Moderate investing may be low
or moderate risks. Moderate investors often also invest in
real estate, providing that it is low risk real estate.

Aggressive investors commonly do most of their investing
in the stock market, which is higher risk. They also tend
to invest in business ventures as well as higher risk real
estate. 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 expect to be able to rent the apartments out for
more money than the apartments are currently worth – or to
sell the entire property for a profit on their initial
investments. In some cases, this works out just fine, and
in other cases, it doesn’t. It’s 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. Understand the risks
involved, and pay attention to past trends as well. History
does indeed repeat itself, and investors know this first
hand!

Until the next post……

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