7 Types of Investment: What’s Right For You?

Investments can be intimidating but with the right information, you can achieve your financial goals. 
By Kaydee Dela Buena

7 Types of Investment What's Right For You
There are multiple investment options and each has its own unique features and risk factors.
Setting financial goals is an effective way to achieve financial success and stability. If you don’t set anything specific, you’re likely to spend more. Before you know it, you may find yourself stuck in a cycle of debt. 

For long-term objectives, investing is one of the best ways to make the most out of your money. When you invest, you set aside money for goals like your retirement or your child’s education. There are multiple investment options available. Each has its own unique features and risk factors. Read on to know more. 

1. Stocks

Stocks represent ownership shares. When you invest in a stock, you’re buying a share of the company’s earnings and assets. This is a way for businesses to raise cash. However, stocks can be risky. Your returns and losses mostly depend on the company’s performance. If the company does well, the value of stocks increases and vice versa. Stock value can also be affected by political and market events. What you can do is to diversify your investments and buy stocks from different companies. It also helps if you keep your stocks for longer periods of time. Many stocks produce higher returns over time. 

2. Bonds

A bond is a loan an investor makes to a company, government, and other types of organization. In return, the bond issuer pays you interest for the borrowed money, and, at the same time, repay you the original amount you paid for the bond (principal). 
In general, bonds are a fixed-income investment. Interest is paid in regular installments, usually once or twice a year. The total principal, on the other hand, is paid during the bond’s maturity date. Bonds are preferred mostly than stocks but can still generate lower returns. Government bonds are safer than that of a corporate one. If you purchase an individual bond, make sure you sell it before it matures to get your investment’s worth.

3. Mutual Funds

If you can’t decide between investing on a stock or bond, then mutual funds might be for you. Mutual funds diversify your investments by pooling your money with other people. Instead of making purchases on your own, you employ a money manager to do all the investment for you. They will invest your money in stocks, bonds, and other assets. Mutual funds allow you to get good returns and opportunities, as well as professional management. The risk, however, is dependent on the investments within a fund. For example, when the value of the investment increases, the higher the fund value, which can be sold for profit. Take note that even if you don't make positive returns, you will still have to pay your manager. More than that, mutual funds require an annual fee (expense ratio) before you can even invest.

4. Property

This includes housing, real estate, raw land, and other rental properties. This type of investment is appealing to many primarily because it’s tangible. There is a sense of pride in ownership. However, property investment comes with many risks. First, you might not get your investment’s worth. This occurs when property value goes down. It will be difficult to sell then, leaving your money hanging since you can't literally get a hold of it. Secondly, interest rates tend to increase so unless you have a fixed mortgage, you might find yourself stuck with endless payments. Lastly, property investment is subjected to property taxes even if there’s no return of profit. 

5. Money Market Funds

Not to be confused with the normal savings account, money market funds allow the investor to leave a certain amount in a bank for a predetermined period of time. By the time it’s over, you get your principal back but for a slightly higher rate of interest. The allotted time period spans from at least three months to a year. Although you can write checks out of money market funds, the value of investment decreases as you do so. 

6. Retirement Plans

People invest mainly to secure their future, and this includes time after retirement. Retirement plans usually provide tax benefits, as well as opportunities to increase savings over time. For example, annuities are often part of many people’s retirement savings plan. It works like a pension plan wherein you put money into a life insurance product. In return, you get a stream of income on a monthly basis for as long as you live.

7. Insurance with VUL

Of all the things people have to deal with every day, it is the uncertainties of life that scares us the most. Investing in life insurance provides security for you and your family. Life insurance comes in different forms offering varying objectives. Some focus on covering health-care expenses. As for other life insurance products, some provide you with investment returns or cash benefits in the case of your demise. Whatever your situation may be, it’s never too late to invest in life insurance plans, like FWD’s Set For Life. Get lifetime coverage while potentially growing your money. This VUL plan allows you to invest your money in various FWD funds so you can start earning money for your future financial goals. Learn more about FWD’s Set for Life here. 

There are multiple investment options available today. Each has its levels of risk and reward. Before any commitment, make sure that the type of investment you choose aligns with your current and future financial goals.