Stock Market
The following are the kind of investment wherein you can now decide where to invest your hard earned money. Remember, your targeted goals count this much. In investing you should know that times and economic conditions are constantly changing, and the kinds of investments that will have a certain degree of return or risk will change with the economy.
When interest rates are high and inflation is high, obviously real property, residential housing, apartment complexes, or office buildings generally do well. But when the interest rates and inflation are down, stocks and bonds generally do well. When the economy changes, so do risk and returns also.
Kind of Investment
A. Secure Income Investment
These are investments that primarily generate income.
There are six major types of long-term investment.
This kind of investment is in the middle and thus represents the crossover from the conservative to the speculative. During one cycle of the economy these investment appear to be conservative. Then during the next cycle they appear to be speculative.
D. Speculative Growth
There are three major types of speculative growth investment.
E. Pure Speculation
These are investment that would normally be a relatively small part of any investment plan. Their primary value is their sizable potential appreciation – in other words, speculation.
Kind of Investment
A. Secure Income Investment
These are investments that primarily generate income.
- Government Securities. Included in this group are the treasury bills, GNMA bonds , i.e. called ginni-mae bonds savings bonds, etc.
- Bank Securities. Included here are passbook savings accounts, certificates of deposit, and insured money funds. One advantage of bank investment is that you can get into them with smaller amounts of money. And also bank are protected by insurance.
There are six major types of long-term investment.
- Municipal Bonds. These bonds issued by a particular municipality in your country. The primary selling point is that most or all of the income from municipal bond neither is exempt from federal income taxes and is nor normally are issued.
- Mortgages. A mortgage investment is a contract where you lend to buy a home or other real property, and you hold the first mortgage right to it.
- Corporate Bonds. A corporate bond is a note issued by a corporation to finance its operation. If the corporation defaults, the assets of the entire corporation can be attached. The liability of this type of investment is that if the corporation files for bankruptcy, your bond are included in the bankruptcy proceeding along with all the other corporate debts. So your earnings here are depending on the success of the company or corporation.
- Insurance Annuity. This investment requires a prescribed amount of money to be paid into the annuity and then the issuing company promises you an income each month upon retirement.
- Stock Dividends. Common stocks usually pay dividends based on the earnings of the company. Stocks have the advantage of being sold for relatively small amount of money. In this kind of investment you should look for a company that has paid dividends for many years, particularly during economic hard times.
- Money Funds. Money funds are polled savings accounts. Basically they pool the savings of many people and use their funds to purchase short-term securities. These are not true savings account. They are short-term mutual funds that pay interest.
This kind of investment is in the middle and thus represents the crossover from the conservative to the speculative. During one cycle of the economy these investment appear to be conservative. Then during the next cycle they appear to be speculative.
- Farm Land. Developed farm land was consistently one of the best investments in the world during even the decades of 60s and 70s. It could well be a great investment in the future.
- Housing. There have been no investments over the last 25 years that have been consistently better for the average investment than single-family rental house. Still in my research rental housing has a good promise of growth through the end of this century, barring an economic catastrophe. Rental housing really makes sense if you’re willing to put your time and effort.
D. Speculative Growth
There are three major types of speculative growth investment.
- Mutual Funds. A mutual fund is a investment where many small investors pool their money and a group of professional advisers invest it for them, usually funds that invest in automobiles, precious metals, utility companies, government securities, and so forth. You can find a mutual fund almost any area that you want to invest in.
- Common Stocks. One advantage of common stocks is that you can invest with a relatively small amount of money and potential exists for sizable growth.
- Precious Metals. Precious metals such as gold, silver, or platinum can be purchased either for long-term growth or pure speculation. Long term growth really means that you buy the metal, put it into a safety-deposit box, and let it appreciate for a period of time. Gold and silver fluctuate with the economy. But Gold usually cycles faster and further than silver, primarily because more people trade in it.
- Limited Partnership. A limited partnership is where you pool your money with another group of investors to purchase an investment, usually in real properties. The investment is managed by a general partner who has an authority to buy and sell.
E. Pure Speculation
These are investment that would normally be a relatively small part of any investment plan. Their primary value is their sizable potential appreciation – in other words, speculation.
- Gold and Silver. I myself tried already. I purchased my gold jewelries 5 years ago and the value now almost double the value I bought before. So it could be also a short-term speculation.
- Oil and Gas. I have many friends invested this kind of investment. In my research this kind of investment is a high risk. Vast majority lost their investment when the prices fell and marginal wells were unprofitable.
RSS Feed
