Advantages and disadvantages of different types of investments
When you decide where to invest your money, you should always consider your investment objectives and goals. Different types of investments carry varying degrees of risk and potential return.
CD
A bank CD is a very safe investment. The CD is FDIC insured up to $ 100,000, so there is really a minimal risk. The only drawback is that you can not put that money in the CD for a specific amount of time or else you will get a penalty notice. Bank CDs are generally only pay up to 5% interest.
Bonds
A mortgage is essentially a loan you make to a company or a government. Bonds have varying degrees of risk, from essentially risk-free treasuries to junk bonds. The higher the risk of the bond, the higher the return will generally be.
Stocks
Stocks are investments in companies. Depending on the company, the risk of the investment may be high or low. It is clear that the sale of stock in Johnson and Johnson is a much less risky than a new Internet enterprise. In general, the return on average equity of approximately 10% per year, although the actual yield of any given stock will vary considerably.
Mutual Funds
A mutual fund typically invests in more than 100 shares, so it is a direct way to diversify your portfolio. But the mutual fund generally cost a fee, which is about 1% of your assets per year.Because of this fee, most mutual funds are not better than the market, a blind monkey picking 100 stocks, but not a fee, you can easily better than most mutual funds.
Real Estate
Real Estate is a popular investment. The most obvious real estate investment you make when you buy your home. Your house may go down in value if you are selling, it depends on the housing market in your area.
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CD
A bank CD is a very safe investment. The CD is FDIC insured up to $ 100,000, so there is really a minimal risk. The only drawback is that you can not put that money in the CD for a specific amount of time or else you will get a penalty notice. Bank CDs are generally only pay up to 5% interest.
Bonds
A mortgage is essentially a loan you make to a company or a government. Bonds have varying degrees of risk, from essentially risk-free treasuries to junk bonds. The higher the risk of the bond, the higher the return will generally be.
Stocks
Stocks are investments in companies. Depending on the company, the risk of the investment may be high or low. It is clear that the sale of stock in Johnson and Johnson is a much less risky than a new Internet enterprise. In general, the return on average equity of approximately 10% per year, although the actual yield of any given stock will vary considerably.
Mutual Funds
A mutual fund typically invests in more than 100 shares, so it is a direct way to diversify your portfolio. But the mutual fund generally cost a fee, which is about 1% of your assets per year.Because of this fee, most mutual funds are not better than the market, a blind monkey picking 100 stocks, but not a fee, you can easily better than most mutual funds.
Real Estate
Real Estate is a popular investment. The most obvious real estate investment you make when you buy your home. Your house may go down in value if you are selling, it depends on the housing market in your area.
Source: Free Article
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