Types

There are three main types of investments: stocks, cash and bonds. These investments are also commonly referred to as asset classes. Many people consider assets such as homes to be investments because of advantages like tax breaks.

Cash

Cash investments symbolize short-term instruments. These offer more strength and protection for investments. Unlike stocks, cash investments offer slimmer chances for growth and also come with the lowest amount of risk. Some examples of cash investments are certificates of deposits (CDs), bank accounts and money market funds.

Bonds

Bonds represent loans to either corporations or the government, and are supposed to offer steady, consistent fixed income. Bond investments are somewhere in the middle of cash and stocks investments; they come with a moderate level of risk. Commercial bonds are established by companies, and people can generally invest in these through pooled funds with others.

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