Five choices to store and grow wealth

When you look at investing, there are really only five choices. Here’s a look at the classes of assets you’ll generally be considering when you invest:

1. Start or Operate a Company: Selling a product or service that meets the needs of the marketplace can be the fastest path to financial freedom. However, this can also be the riskiest and least likely to succeed when you evaluate your choices.

2. Stocks: Although past performance is no guarantee of future results, stocks have historically provided a higher average annual rate of return than other investments, including bonds and cash equivalents. However, stocks are generally more volatile than bonds or cash equivalents. Investing in stocks may be appropriate if your investment goals are long-term.

3. Bonds: Historically less volatile than stocks, bonds do not provide as much opportunity for growth as stocks do. When interest rates rise, bond values tend to fall, and when interest rates fall, bond values tend to rise. Because bonds of r fixed interest payments at regular intervals, they may be appropriate if you want regular income from your
investments.
4. Cash Equivalents: Cash equivalents (or short-term instruments) such as money market funds offer a lower potential for growth than other types of assets but are the least volatile. They are subject to inflation risk, the chance that returns won’t outpace rising prices. They provide easier access to funds than longer-term investments and may be appropriate if your investment goals are short-term.
5. Alternative Assets: The term “alternative assets”  is highly flexible and is used to describe specific physical assets, such as natural resources and real estate, as well as methods of investing, such as hedge funds and private equity. In some cases, even geographic regions, such as emerging global markets, are considered alternative assets. These are often investments that are unrelated to other asset types.

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Posted in Finances by jay No Comments Yet