Popular Types of Investment

There are many types of investments, but the most popular type is where your money is pooled in with other investors and spread across a range of various investments. The proper name for this is diversification.

One of the ways to access investment funds is by going through product schemes such as an ISA (individual savings account), or a workplace pension. However there are many others aside from these that provide interest rates.

Certificate of Deposit

A Certificate of deposit (CD) is one of the many basic investments that work like a standard savings account. You can deposit money into a CD and you will receive an interest rate of the amount you have deposited. The difference with CD is that you agree to secure and contain the money in the CD account for a certain period of time, this could be two years, during which time you would earn an interest for the time the money is locked and be unable to withdraw the money from the account. Certificates of Deposit are generally known to be low risk investments which can also pay at higher levels of interest rates compared to other investments.

Bonds

Bonds are a form of borrowing funds. Debt securities are issued by borrowers such as the government or companies that are looking to raise funds from the financial markets. Bonds are fixed income securities as they pay a steady flow of interest at regular intervals throughout the course of owning the bond. Bonds can last as little as two days, or longer, during which time you would receive interest payments from the bond.

Shares

Shares are essentially the capital of companies that is divided into shares between all of its investors. Each share constitutes a unit of ownership from the company and is then offered for sale in order to raise capital for the primary company. You ultimately become a shareholder of the company and will be entitled to any of the dividends that are raised and paid. Shares can also be divided into two broad categories.

Traded Life Policies

A traded life policy (TLP) is mainly a US issued life policy that is sold by the native policy holder to an investor aside from the insurer, this essentially allows the original owner to gain some of the benefits provided during the time within the policy. TLP’s are also known as ‘death bonds’ because of the fact that the policy is revolved around life assurance policies. TLP’s can pay a regular income or can object to grow in value over a duration of time.

Exchange Traded Funds

Exchange Traded Funds (ETF’S) is a market based security that basically tracks a number of funds through investments, such as an index, a commodity, bonds or a pot of similar to an index fund. ETF is a common stock on stock exchanges that experience cost changes throughout the course of a day during the period they are purchase and sold. Because ETF trades act like a stock it does not contain net asset values that are generally calculated every day at the end of the day, much like mutual funds work.

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