When managed responsibly, investing is a powerful tool one can use to grow their money. But before jumping into the deep end, it’s important to understand which investments are for you. There are tons of options on the market today, from individual stocks and government bonds to mutual funds and value stock funds. Below, we’ve compiled a list of the best investments for investors of all ages. Regardless of your age or income level, investing in the four products below is always a smart decision.
Corporate Bonds
Corporate bonds are riskier than government bonds but for good reason – they usually result in greater gains. Like government bonds, corporate bonds effectively function as loans, except this time you’re loaning a specific company money rather than the government. The benefit of corporate bonds is that they offer fixed-income security with potentially higher yields than government bonds. It’s worth noting that corporate bonds are not backed by the government, which does make them riskier. Be sure to consider your risk level and financial goals before investing in any product, including a corporate bond.
Mutual Funds
A mutual fund is one investment type that never goes out of style. Mutual funds allow investors to diversify their portfolios in one convenient product. In essence, it enables you to spread your money across multiple investments to mitigate the effects of a single investment’s loss. If you’re saving for a long-term goal, such as retirement or your child’s college fund, mutual funds might be a wise decision. They can be purchased directly from the companies that manage them, as well as through brokerages and financial institutions like banks.
Guaranteed Investment Certificates
Another sound investment for people of all ages and income levels is guaranteed investment certificates. Guaranteed investment certificates, or GICs, are a low-risk investment option because you are guaranteed a return on your principal, so long as you leave your money invested for the duration of the term. There are many types of GICs to suit a range of financial goals. This makes them suitable for investors with both long-term goals like saving for retirement and short-term goals like saving for an upcoming vacation. Some of the most popular types are: fixed-rate GICs, variable-rate GICs, market-linked GICs, cashable GICs, and redeemable GICs. You should choose your GIC based not only on interest rates but on how long you’re willing to leave your money invested and how much flexibility you want to be able to withdraw your money early. Generally speaking, of course, the greater your investment and the longer the term, the better the interest rate.
Exchange-Traded Funds
Exchange-traded funds (ETFs) are one final investment type that is likely worth your time at any age. ETFs are similar to mutual funds, except investors buy shares of ETFs like they would a stock. However, like mutual funds, ETFs are made up of a wide variety of stocks in one. So anytime you buy an ETF, you are diversifying your portfolio. Since they comprise several companies, they are considered far less risky than investing in individual stocks. Some ETFs have specific scopes, such as women-owned companies or technology companies, allowing you to invest in a specific sector should you choose to do so.
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