Best Investments for You 101

For the traditional US household when asked ‘What do you invest in?’ the answer is usually limited to Mutual Funds, 401k, or some form of US stock holdings.  Many people do not venture past this level of the investing world.  We are limited on our financial knowledge and understanding of how it works and honestly most of us are limited on our knowledge of how the investments that we have even work.  I am certain that if the US citizens knew what was and is being done with their money then we would not be in this financial pickle and there would be a lot more angry Americans.  This is an outline of some very basic definitions for a variety of different investments.  Each category has its pro’s and con’s for each and each of them have opportunities to make a lot of money and loose a lot of money as well.  The trick is to get educated with the knowledge and understanding of how money (all forms of it) flows and works and use this knowledge to help you profit.

Mutual Funds are basically a group of different businesses that a financial advisor will invest your money into for a safe slow growth return.  This is what most IRS’s and 401k’s are put into.

Foreign Stocks are what many use to create a diverse portfolio.  People or financial advisors will invest into stocks from developed countries...think Sony, Toshiba, Nintendo these are reputable companies that have many American stock holders.  This is also a strategy that will reduce risk and create growth for the long term.  

Domestic Stock there are also Mutual Funds, however you can invest all or some of your money into US based companies.

Emerging Market Socks are stocks from markets that are in markets that are expected to grow rapidly and quickly.  This can be foreign or domestic and many view as high risk.  However, with all investments it take the correct knowledge for success and this category is no different.  

Many people will argue to the death that this his a horrible category to invest in. This is simply not true. It may be horrible if you absolutely nothing about it. Commodities can be a risky place to keep your money. This is investing in Gold, Silver, Oil, Cotton, Corn and actual physically commodities. In times of economic crisis this can be a great place to have your money. Again the only thing that makes an investment risky is the investors lack of knowledge.

Futures Market is a market similar to a Stock Exchange where commodities can be traded. You can buy a share of a commodity and sell it for a profit in the sometime future or vise versa.

Many people like ETF’s for low cost, tax efficiency, and stock like features.  ETF’s are investment funds traded on the stock market that hold stock commodities or bonds

Treasury bonds are cheap to buy and are comforting to some during an economic crisis. The thought behind them is that the US government will always honor them and will not ask for you to return them

These are also a safe harbor to protect for economic crisis or when inflation is predicted.  This is a great hedge against inflation.  These are treasuries that provide an actual rate of return.  

This is investing in a currency that you believe will go up or down and then moving the money into another currency to make a profit.  It has been around for a long time but it is now just becoming popular.  

Real Estate is the long time safe hold and strong arm of investing.  People commonly use Real Estate Investment Trusts to invest in this category to lower their risk.  Many people say that investing in Real Estate is better than investing in bonds and worse than investing in stocks.

Finding a business or business partner that is a good idea and investing your money for a certain return.  Not an investment for the common investor but, it happens very often.  

This is just scratching the surface of the investment world,  There are many other investment vehicles that are out there.  The common advice for the average American is to diversify your portfolio and invest for the long term.  I believe listening to this advice is exactly what has gotten us into the financial pickle that we are in.  This advice worked for the generations before us however, it is not working for us now.  It is advice that revolves around the strength of the US economy and, the question now is ‘How much faith do your really have in the US economy?’  The secret to making money in investing is to get educated and learn where to put your money during the correct time.  The wealthy move their money accordingly to the change of economy and it is not hard to do and very easy to understand if you take some time to learn how it works.  Best of luck to  you and your investing future.