Types of Investment

          As we mentioned in the introduction of the Investments 101 section, an investment is generally referred to as the present commitment of resources with the expectation of future gain. Therefore, virtually every transaction in every corner of the world takes on the form of an investment. For the sake of narrowing down the countless forms of investment, this section outlines the most common types of investments that you should recognize and understand.

Cash: Asset in the form of currency or currency equivalents that can be accessed immediately.

  • Coins
  • Paper money
  • Money market accounts
  • Foreign exchange

Bond: A debt security in which the issuer must repay the principal debt to the holder and interest by a specified maturity date.

  • Public vs. Private: Government bonds or Corporate bonds
  • Government Terms: Treasury bills (1 year or less), Treasury notes (2-10 years), Treasury bonds (10-30 years)
  • Corporate Grade: Investment (BBB- and higher), Junk (BB+ or lower)
  • Location: Domestic, Foreign, Emerging Markets

Stock: A security representing ownership in a company and a claim to its assets and earnings.

  • Type: Common or Preferred
  • Size: Large-Cap, Mid-Cap, Small-Cap
  • Style: Value, Growth, Blend
  • Location: Domestic, Foreign, Emerging Markets
Real Estate: Asset encompassing land as well as anything permanently affixed on the land.
  • Residential: Apartment, House, Condominium
  • Commercial: Industrial Park, Office Plaza, Mall, Gas Station, Convenience Store
Commodity: Good or product of value supplied without substantial differentiation.
  • Agricultural: Wheat, Corn, Cocoa, Soybeans, Oats
  • Livestock: Cattle, Hogs
  • Energy: Oil, Natural Gas, Ethanol, Propane, Uranium
  • Precious Metals: Gold, Silver, Platinum
  • Industrial Metals: Copper, Lead, Aluminum, Nickel, Zinc, Tin