Investments is a wide-ranging topic, and many goals are achieved by saving and investing. Oftentimes when one hears the word "investment" they think of stocks, and perhaps bonds. But where you decide to put your money is effectively an investment decision, and the options are not necessarily limited to stocks and bonds. For example, you could invest your money in a savings account or real estate. To develop a basic understanding investments let's start with the major categories. They are:
Each category contains a multitude of investments. We will cover major classes of investments, including the grouping of assets in mutual funds and exchangetraded funds. We will just touch on one other category of investments: alternatives, which contains investments such as currency exchange, commodities (e.g., oil, cotton, bananas) and hedge funds. In addition and importantly, we will look at the risks, potential returns, and why we diversify portfolios.
Michael Angell, CFP®, EA is an associate professor at the College for Financial Planning. He obtained his bachelor's degree in mathematics at Creighton University. His 20+ years of work experience includes banking, insurance, investments, retirement, and estate planning. In addition to his responsibilities at the College, Michael also serves as a private client services advisor with an independent investment firm and is also a federally licensed tax practitioner with a nationally recognized company. You can contact him at email@example.com.