There are a large number of types of investments, so we will only look at the most popular and most commonly found in practice and give some examples.
● Mutual funds
This type of investment pools funds from different investors to invest in securities such as stocks, bonds or other money market instruments. A mutual fund is a type of collective investment formed with the help of the common assets of several persons; the funds thus raised are subsequently invested.
● Physical Shares
Shares can be classified as one of the most popular growth-oriented investments. Their purchase and principle is basically very simple. If you buy physical shares, you become a part-owner of a publicly traded company and are entitled to voting rights, a share of the profits in the form of dividends paid out or a possible liquidation balance (if the company runs into trouble and goes out of business).
● Real Estate
Investing in real estate (buying it for appreciation) brings several benefits. You can choose from a wide range of properties, or you can also invest in commercial premises or residential properties and earn significant returns on your investment. However, the investor must also take into account the often high price of the asset and the long time horizon of holding the investment to ensure that it is sufficiently liquid.
Did you know that bonds are relatively the most widely used investment instrument in the world? Investing in them is especially suitable for beginners who are looking for a stable development with relatively low fluctuations and at the same time an interesting return. They are fixed-income securities that represent a loan made by the investor to a company or a government. They are particularly popular because of their relatively predictable yield.
One option is to invest in cryptocurrencies, which have become very popular especially in recent years although they are considered very risky and speculative. They are digital assets created using computer network software that allows them to be traded and owned. Their great advantage is that they are not regulated by governments or central banks - yet. At the same time, they are very volatile and therefore an investment in them is a high-risk one.
● Term deposits
A fixed-term deposit works on the principle of a bank account where you can deposit money and the money you deposit earns a higher rate of interest than a savings account because it is tied to a specific time horizon. This type of investment is one of the safest but also one of the least profitable financial instruments. The interest rate is fixed in advance and is not affected by market fluctuations, which makes the investment safer, but on the other hand, the return often does not even cover the amount of inflation.
When investing, you can buy and sell commodities such as oil, natural gas, gold, silver and other commodities, whether they are agricultural, energy or precious metals, for example. You can invest on exchanges around the world, where not only physical commodities themselves are traded, but also futures contracts and options on a wide variety of commodities.
Peter Svoreň, APME FX