5: Investment Type Basics

There are five common types of investments. Let’s take a brief look at each one.

Mutual funds are a pool of investments that sells its shares to investors. Mutual funds allow you to diversify your portfolio by investing in a number of different investments.

Exchange-traded funds – or ETFs – are pools of investments that trade on a stock exchange. ETFs are attractive to investors because of their low cost, diversification, and share-like features.

Equities (also known as stocks or shares), give investors an ownership interest in a company. Investors can buy equities on stock exchanges.

Bonds allow you to lend money to a company or a government. The loan will be for a set period of time, during which investors will typically be paid interest.

Guaranteed investment certificates – or GICs – are certificates of deposits at a bank or other financial institution for a fixed period of time.

It’s important to note that these common types of investments, like any investment in general, come with risks. Always consider the risks before committing to an investment.