We all know that investing is important but when it comes to picking the right type of investment, there are a lot of options available.
This can be confusing, but luckily we’ve gathered 15 of the most common types of investments and outlined their benefits and drawbacks. So if you’re looking to get started with investing, this is a good place to start accumulating wealth over time.
Related: 6 Timeless Investment Principles
Table of Contents
What are the best investments?
Among these investment options, these are the top 3 investments that you should consider.
Bonds
12 Points (out of 20)
If you have a passion for stability and you want a guarantee that your investments will pay off in the long run, bonds may be the ideal option.
Crypto
13 Points (out of 20)
If you’re a person with a high-risk tolerance who wants to earn substantial gains in your investments and is fearless about fluctuations in the markets, cryptocurrency is perfect for you.
List of the Types of Investments
These are the types of investments that you could make to grow your money in the short or long term.
1. Cryptocurrency
Total Rating: 13/20 Stars
- Risk Level: 1/5 ★☆☆☆☆ (Very high)
- Profit Potential: 5/5 ★★★★★ (Very high)
- Difficulty: 2/5 ★★☆☆☆ (High)
- Initial Capital: 5/5 ★★★★★ (Very low)
Cryptocurrency is a digital or virtual currency that uses cryptography to secure its transactions and to control the creation of new units. Cryptocurrency is sometimes called “digital cash.”
Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Cryptocurrencies are not legal tender, but their price can be volatile, which makes them good investments. You could earn significant amounts from your investments if you know how to invest in cryptocurrency. You can easily buy Bitcoin through Coins PH.
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2. Non-Fungible Tokens (NFTs)
Total Rating: 11/20 Stars
- Risk Level: 1/5 ★☆☆☆☆ (Very high)
- Profit Potential: 4/5 ★★★★☆ (High)
- Difficulty: 2/5 ★★☆☆☆ (High)
- Initial Capital: 4/5 ★★★★☆ (Low)
Non-fungible tokens, or “NFTs,” are digital tokens that can only be used by the owner of the token, unlike fungible tokens, which can be traded between different owners. NFTs have become popular investment vehicles in recent years, as they have the potential to provide high returns. Play-to-earn games have also grown in popularity which enables massive trading of NFTs.
3. Stocks
Total Rating: 10/20 Stars
- Risk Level: 1/5 ★☆☆☆☆ (Very high)
- Profit Potential: 3.5/5 ★★★☆☆ (Moderate)
- Difficulty: 2/5 ★★☆☆☆ (High)
- Initial Capital: 3.5/5 ★★★☆☆ (Moderate)
Stocks are pieces of ownership in a company and it represents an investment in the future income of that company. When you buy a stock, you are investing in that company. You hope that the company will make money and that the value of your stock will increase.
Stocks are a good investment because they give you a share of the profits made by the company. They are also a good way to get exposure to the stock market, so you can make money if the stock prices go up.
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4. Bonds
Total Rating: 12/20
- Risk Level: 4/5 ★★★★☆ (Low)
- Profit Potential: 2/5 ★★☆☆☆ (Low)
- Difficulty: 3/5 ★★★☆☆ (Moderate)
- Initial Capital: 3/5 ★★★☆☆ (Moderate)
Bonds are a type of security that provides investors with the opportunity to earn interest on their investments. Bonds are considered good investments because they offer a low-risk return and are often considered stable investments. Bonds typically have a longer maturity than other types of investments, which means that they will provide investors with consistent income over some time.
5. Options
Total Rating: 9/20
- Risk Level: 2/5 ★★☆☆☆ (High)
- Profit Potential: 3/5 ★★★☆☆ (Moderate)
- Difficulty: 1/5 ★★☆☆☆ (Very High)
- Initial Capital: 3/5 ★★★☆☆ (Moderate)
Options are a type of investment that gives the owner the right, but not the obligation, to buy or sell a security at a set price or within a set period of time. Because options come with certain risks and rewards, they’re often thought of as a gamble, but there are ways to reduce those risks. Options can be an excellent way to bet on the direction of the market, and can also provide income when the underlying security is traded.
6. Mutual Funds
Total Rating: 11/20
- Risk Level: 3/5 ★★★☆☆ (Moderate)
- Profit Potential: 2/5 ★★☆☆☆ (Low)
- Difficulty: 3/5 ★★★☆☆ (Moderate)
- Initial Capital: 3/5 ★★★☆☆ (Moderate)
Mutual funds are a type of investment account that pools money from many individual investors and invests it in a variety of securities, including stocks, bonds, and other investments. Mutual fund investors typically receive periodic payments based on the returns of the fund’s underlying assets. These payments can add up over time, making mutual funds a good investment choice for people who want to save for long-term goals.
Check out our list of the best mutual fund companies in the Philippines to get started.
7. Real Estate
Total Rating: 9/20
- Risk Level: 2/5 ★★☆☆☆ (High)
- Profit Potential: 3/5 ★★★☆☆ (Moderate)
- Difficulty: 3/5 ★★★☆☆ (Moderate)
- Initial Capital: 1/5 ★☆☆☆☆ (Very high)
Real estate investment has been around for centuries. It’s a good way to make money, and it’s a safe investment. There are a lot of different types of real estate, and each one has its benefits. When you buy real estate, you’re buying a piece of land or a building that somebody else owns. You can either rent out the property or sell it. You can also buy foreclosed properties to maximize your earnings.
8. Exchange-traded Funds (ETFs)
Total Rating: 12/20
- Risk Level: 3/5 ★★★☆☆ (Moderate)
- Profit Potential: 2.5/5 ★★☆☆☆ (Moderate)
- Difficulty: 2.5/5 ★★☆☆☆ (Moderate)
- Initial Capital: 4/5 ★★★★☆ (Low)
Exchange-traded funds (ETFs) are a type of investment that offers investors the ability to trade shares in a fund while it is still actively managed. ETFs are often seen as a good alternative to mutual funds because they are cheaper and easier to trade. ETFs are also a good way to invest in a particular sector or theme or to track a particular stock index.
9. Commodities
Total Rating: 11/20
- Risk Level: 2/5 ★★☆☆☆ (High)
- Profit Potential: 3/5 ★★★☆☆ (Moderate)
- Difficulty: 2/5 ★★☆☆☆ (High)
- Initial Capital: 4/5 ★★★★☆ (Low)
Commodities are items that can be bought and sold on the open market. They are often used as a way to store value or to speculate in the market. Some commodities, such as oil or gold, are considered to be valuable due to their rarity or because they are necessary for everyday life. Other commodities, such as cotton or sugar, are considered to be valuable because of their prices on the open market.
10. Certificates of Deposits (CDs)
Total Rating: 11/20
- Risk Level: 4/5 ★★★★☆ (Low)
- Profit Potential: 1/5 ★☆☆☆☆ (Very low)
- Difficulty: 3/5 ★★★☆☆ (Moderate)
- Initial Capital: 3/5 ★★★☆☆ (Moderate)
Certificates of Deposits (CDs) are a type of savings account where you deposit money with a bank and receive a certificate in return. The certificate has a set term, such as 3 months, 6 months, or 1 year. Once the term is up, the certificate becomes an ordinary savings account with the bank. Some banks like Security Bank offer a long-term CD for 5 years with a 4% return per annum.
11. Annuities
Total Rating: 9/20
- Risk Level: 4/5 ★★★★☆ (Low)
- Profit Potential: 2/5 ★★☆☆☆ (Low)
- Difficulty: 2/5 ★★☆☆☆ (High)
- Initial Capital: 1/5 ★☆☆☆☆ (Very high)
Annuities is an insurance product that pays a fixed monthly income to the policyholder for the rest of their life. It is a contract between an individual and an insurance company that provides a periodic payment, called an annuity income, to the annuitant. The annuitant pays fixed premiums for the life of the contract, and the policy provides payments at regular intervals, usually monthly or annually for a set number of years.
12. Retirement Plans
Total Rating: 9/20
- Risk Level: 3/5 ★★★☆☆ (Moderate)
- Profit Potential: 2/5 ★★☆☆☆ (Low)
- Difficulty: 2/5 ★★☆☆☆ (High)
- Initial Capital: 2/5 ★★☆☆☆ (High)
Retirement plans are a means of saving for your retirement. They can be through your employer, through a plan offered by a financial institution, or you can create your own retirement plan. They can offer tax advantages and may provide you with a pension or other benefits when you retire. A retirement plan can provide you with money to live on when you retire, as well as protect your assets for future generations.
13. Educational Plans
Total Rating: 10/20
- Risk Level: 2.5/5 ★★☆☆☆ (High)
- Profit Potential: 2/5 ★★☆☆☆ (Low)
- Difficulty: 3/5 ★★★☆☆ (Moderate)
- Initial Capital: 2.5/5 ★★☆☆☆ (Moderate)
Educational plans are a type of investment that helps cover the cost of tuition and other educational-related expenses like taking an MBA from the best MBA schools. It’s considered a good investment because it can help pay for your children’s education. The main types of educational plans are private school, college, and university plans. These plans typically have low premiums, but the benefits can be substantial.
14. Security Futures
Total Rating: 11/20
- Risk Level: 1.5/5 ★☆☆☆☆ (Very high)
- Profit Potential: 4/5 ★★★★☆ (High)
- Difficulty: 2.5/5 ★★☆☆☆ (High)
- Initial Capital: 3.5/5 ★★★☆☆ (Moderate)
Security futures are contracts that give the holder the right, but not the obligation, to buy or sell a security at a predetermined price on a specific date in the future. It allows investors to bet on the price of a security, rather than purchasing the security outright.
They are said to be a good investment because they offer stability and liquidity. Security futures are also regulated, which provides investors with more confidence in their potential returns. This can be a good investment because it allows you to speculate on the price of a security without actually buying or selling it.
15. Insurance
Total Rating: 11/20
- Risk Level: 3/5 ★★★☆☆ (Very high)
- Profit Potential: 3/5 ★★★☆☆ (Very high)
- Difficulty: 2/5 ★★☆☆☆ (High)
- Initial Capital: 3/5 ★★★☆☆ (Very low)
Insurance can offer protection against a range of risks, including health issues, natural disasters, and theft. Insurance is an investment that can pay off in a number of ways. By protecting yourself and your loved ones, you can reduce the chances of having to deal with costly financial issues down the road. Additionally, insurance can also provide periods of peace of mind during troubling times.
There are four major types of insurance: Life Insurance, Health Insurance, Long-term Disability Coverage, and Auto Insurance.
What is an Investment?
An investment is a sum of money that one expects to earn a return on. Investing is the process of purchasing an asset with the hope that its value will increase over time.
In other words, investing is placing money into a project or enterprise with the hope of seeing it grow in value. Investments can be made in stocks, bonds, real estate, and other assets.
There are a variety of reasons to invest: to make money, to get a return on your investment, to diversify your portfolio, or to protect yourself from future risks.
What are the benefits of Investment?
When most people think of investment, they think of the stock market. And while investing in stocks can be a great way to grow your money, there are many other types of investment opportunities available. Here are the 6 main benefits of investments:
- Improves financial security
- Growth opportunity
- Risk diversification
- Tax benefits
- Access to capital markets
- Helps to achieve long-term investment goals
Improves financial security
Investment improves financial security by providing a flow of income and potential capital gains. Income from investment may be used to cover living expenses, reduce debt, or save for retirement or other long-term goals. In addition, the potential for capital gains provides the opportunity to increase wealth over time.
Opportunities for growth
Investment is a process that has the potential for significant growth. It can provide opportunities for people to increase their wealth and achieve their financial goals. In order to maximize the potential for success, individuals should do their research and take calculated risks.
Diversifies risk
One of the most important reasons to invest is that it helps to diversify risk. When you spread your money out among different types of investments, you reduce the risk that you will lose all your money if one investment falls in value. Diversification also helps to smooth out the ups and downs of the market, so you don’t lose all your money when the market takes a downturn.
Provides tax benefits
The investment provides tax benefits in the form of deductions and exemptions. These benefits help to reduce the amount of income tax that investors pay on their investments. In addition, investment also provides tax-deferred growth, which allows investors to postpone paying taxes on their investment earnings until they withdraw the money.
Enables access to capital markets
Access to capital markets is a critical factor for businesses of all sizes. The investment provides the cash flow that businesses need to grow and expand. Investing also provides access to a wider range of financing options, which can be essential for businesses that need to scale up quickly. Finally, investment enables businesses to tap into the expertise and resources of the broader investment community.
Helps to achieve long-term financial goals
An important step to achieving your long-term financial goals is investing. Investing allows you to put your money into something that has the potential to grow, which in turn can help you reach your goals quicker. There are a variety of different investment options available, so it’s important to do your research and find the right one for you.
Frequently Asked Questions
What is the most stable investment?
The most stable investment is a government bond. These are bonds issued by a government, typically with a longer maturity date than corporate bonds, and are considered to be low-risk investments.
What is the most volatile investment?
The most volatile investment is cryptocurrency. Cryptocurrency can go up or down in value very quickly, which makes it a risky investment.
What is the safest investment?
The safest investment is generally considered to be a government bond. They offer relatively low returns, but they are considered to be very safe since the government is unlikely to default on its debt.
Another option for a safe investment is a certificate of deposit, which is a type of savings account offered by banks. These accounts offer relatively low returns, but the money is insured by the government, so investors are protected in the event of a bank failure.
What is the best investment for high returns?
Some common options that may offer high returns include stocks, real estate, and cryptocurrency. It is important for investors to do their own research to determine which option is best for them.
What is the best investment for stable returns?
The best investment for stable returns is bonds or certificates of deposit. These investments offer relatively low returns, but they are also very stable and tend to be less volatile than other types of investments.
Final Thoughts
Investments offer individuals a way to save for the future and provide stability during times of economic uncertainty. There are a variety of different types of investments, and each has its own unique set of risks and rewards. It is important to do intensive research and consult with a financial advisor to determine which type of investment is best suited for your needs.
