There are many different types of investments to put your money in and all of them have their pros and cons. Investing intimidates a lot of people. There are a lot of options, and it can be hard to figure out which investments are right for you.

If you’re serious about investing, make sure to consult a financial adviser. When consulting professionals, look for independent financial advisers who get paid only for their time, instead of those who collect commissions.

Above all, diversify your holdings across a wide swath of assets.

Many veteran investors diversify their portfolios using a mix of investment products like those outlined below, with the mix reflecting their tolerance for risk.

However, most people are too busy to worry about monitoring their portfolios on a daily basis. Therefore, sticking with index funds that mirror the market can be a viable solution.

Cash

A cash bank deposit is the simplest, most understandable investment asset—and the safest. Not only does it give investors precise knowledge of the interest they’ll earn, but it also guarantees they’ll get their capital back.

On the downside, the interest earned from cash in a savings account seldom beats inflation and can earn minimal interest in the current environment.

Bonds

Bonds are considered “safe” and very “low risk”. But this safety net usually means a low return. Typically, a bond might only yield a 3% return on your money over a number of years.

This means that when you take your money out of the bond, you may have less buying power than when you put it in, because the growth rate could not keep up with the rate of inflation.

Bonds are debt instruments in which investors effectively loan money to a company or agency.

In exchange, they receive periodic interest payments, plus the return of the bond’s face amount, once the bond matures. Bonds are issued by companies and governments.

Commodities

Commodities refer to tangible resources such as gold, silver, crude oil, and agricultural products that investors can buy.

Gold is a commodity, so be aware that your protection against a price drop is based on scarcity and fear.

If you think the world is going to be a more fearful place in the future, gold is good. When betting on commodities, it is usually just that — betting.

Property

The hardest part about investing in property is getting a house or commercial property that is 50% off the value of what it’s worth.

If you can do that though, you can make some decent returns investing in this area.

However, it might be easier to invest in the stock market, make the same returns or better, and not have to look after a bunch of rental properties.

Alternatively, investors can purchase shares in property investment funds (REITs), which pool the money of several investors together to purchase properties. REITS trade like stocks.

Shares

A share is a small part of a company that you can buy for a set price. Share prices can move up or down in value, depending on the performance of the stock market, the current profitability of the company and the expected future profitability or potential of the company. The aim is to invest in shares that increase in value over time. When you buy shares, you become a shareholder in that company.

This can be risky but the returns can be high if you can get it right. Start by looking at the companies that you understand.

You may also receive a dividend, which is a sum of money paid out of the company’s profits to shareholders. Buying shares involves choosing companies that have the best potential to grow profits. It also means choosing business sectors that have the best growth potential.

  • Benefits – you can potentially earn a good return on your investment from selling shares that have gone up in value since you bought them. You may also benefit from any dividends the company may pay. Remember, you will have to pay tax on both your profits and your dividends.
  • Risks – if your shares fall in value you can lose a lot of money when you come to sell them. Share prices can rise or fall quickly, which makes them more volatile and risky. So, ask yourself if you can afford to take a risk with all or some of your money.
  • The golden rule is not to invest money that you cannot afford to lose. If you want to guarantee that you will not lose any of your money, then the stock market is not for you and you may want to consider savings options.

    Only a stockbroker can buy or sell shares on the stock market. You can buy and sell shares by going directly to a stockbroker, through an investment broker, or with an online share dealing.

    You have to pay service charges when you buy shares and must also pay taxes on profits and dividends. Stockbrokers usually charge fees and commission for buying and selling shares and stamp duty is also charged by the government.