There is a large variety of asset classes available to individual investors today. Each different type of asset has its own risk and reward potential, and there are hundreds and even thousands of individual assets available in each asset class. Individual investors have more options, opportunities and resources available to them today than ever before to make educated decisions in their investing activity.
Stocks
Common stocks are perhaps the most well-known investment option available today. Stocks represent an ownership interest in a given company. These assets are typically purchased in the hope that the price will increase over time resulting in a capital gain.
Bonds
Bonds are a form of debt financing issued by companies and governments. Bond investors typically receive a lower return on investment than stock investors but also enjoy lower volatility and a less of a chance of loss.
Mutual Funds and ETFs
Mutual funds and ETFs (exchange traded funds) are collections of stocks and bonds. While there are some technical differences between the two types of funds they both serve a similar purpose: they give individual investors easy access to a diversified portfolio of assets.
Real Estate
Rental properties and investment real estate are a hands-on form of investing but can be very lucrative. Investment properties that earn positive cash flow (more rent than mortgage and repair expenses) can create a great return on investment but real estate tends to be a high-maintenance form of investing.
Commodities
Commodities are physical products like oil, gold, silver, corn, soybeans or even livestock. Commodities are typically traded to generate capital gains. While investing in commodities is typically considered risky, it is a popular asset class for many investors.
