What are the different types of investments?

100

There are four main investment types or asset classes that you can choose from, each with different characteristics, risks and benefits.

Once you become familiar with the different types of assets, you can begin to think of a mix that best suits your individual circumstances and risk tolerance.

development investment

These are more suitable for long term investors who are willing and able to withstand market volatility.

shares

Stocks are considered growth investments because they can help increase the value of your original investment over the medium to long term.

If you own shares, you can also receive income from dividends, which are effectively a portion of profits paid out to the company’s shareholders.

Of course, the value of the shares may be less than what you paid for. Prices can be volatile from day to day and stocks are generally best suited for long-term investors who are comfortable with these fluctuations.

Also known as equities, stocks have historically given higher returns than other assets, with stocks being considered one of the riskiest types of investments.

Property

Property is also considered as a growth investment as the price of homes and other properties can increase significantly in the medium to long term.

However, like stocks, assets can also fall in value and carry the risk of loss.

It is possible to invest directly but indirectly by purchasing property through property investment funds.

defensive investment

These are more focused on generating consistent income rather than growth, and are considered less risky than growth investments.

cash

Cash investments include daily bank accounts, high interest savings accounts and fixed deposits.

They generally offer the lowest possible return of all types of investments.

While they do not offer any chance of capital growth, they can provide regular income and play a vital role in protecting the fund and reducing risk in an investment portfolio.

fixed interest

The most well-known types of fixed interest are investment bonds, which are essentially when governments or companies borrow money from investors and pay them an interest rate in return.

Bonds are also considered a defensive investment, as they typically offer lower potential returns and lower levels of risk than stocks or assets.

They can also be sold relatively quickly like cash, although it is important to note that they are not without the risk of capital loss.