Investment Vehicles: What Are They and What Are the Risks?

According to the 2019 Schwab Modern Wealth Survey, Americans believe someone to be “wealthy” if they have at least $2.3 million in net worth. Arguably, the best approach to building wealth is to invest and watch your money multiply.

Before you start investing, though, you must understand the different types of investment vehicles, and how they work to appreciate your money.

What Is an Investment Vehicle?

Investment vehicles are just that—they give investors the ability to invest and watch their money grow. There are several different investment vehicles individuals can choose from.

The first investment vehicle, stocks, is a form of equity. Stocks represent ownership of a particular company. Investors can buy and sell shares of stock on an exchange such as the New York Stock Exchange (NYSE) or Nasdaq.

What Are Stocks?

What Are Bonds?

Companies will issue bonds when they are raising money to fund projects and other operations. Bonds are a form of debt, where you invest your money into the company, city or country.

Commodities are assets or goods that can be bought and sold. Investors will commonly purchase commodities to either hedge their positions or as speculation.

What Are Commodities?

What Are Mutual Funds?

Mutual funds allow investors to pool their money together, and then it is managed by a professional money manager. This gives them the ability to invest in stocks, bonds, and commodities that they might not have been able to otherwise.

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