Following are the most common investments that you can or would consider investing in. They are also termed as investment or financial instruments.
Stocks/Equity/Shares: when you own part of the business by holding stocks or shares or equity in a company.
Bonds: these are IOUs (I Owe yoU) where you lend money against an IOU, and you get back the money you lent plus the interest specified in the IOU.
Mutual Funds: a mutual fund is a collection or basket of investments in one or more of the instruments listed on this page, and you can own a Unit of this basket. The basket is split into N number of Units, and if you buy 1 Unit, then you own 1/Nth of that particular Fund. Thus, money from many investors, individual and/or corporate, is pooled and invested in the Mutual Fund. The daily price of a Unit of a MF is calculated at the end of the day, after the markets close, based on the closing price of the investments held in the basket. Its called the Net Asset Value, or NAV of the Mutual Fund.
Exchange Traded Funds (ETFs): ETFs are mutual funds, but which are traded like stocks on the Stock Exchanges, and their prices fluctuate like stocks during the day. Thus, unlike the MFs, you don’t have to wait till the end of the day to know the price for today, and you can sell or buy ETFs instantly like you can stocks if the price you prefer to sell or buy at is reached.
Derivatives: Futures and options, for example, are types of derivative contracts that are based on some underlying asset class, like stocks or commodities or currencies etc. A future or option is traded independently of the underlying asset from which it is derived, but whose price fluctuates based on the price of the underlying asset from which it is derived.
Commodities: Oil, Gas, Wheat, Corn, Soybean, Gold, Silver, Hogs / Pork, Cattle etc. are many of the commodities you can invest or trade in.
Property: Land, commercial property, residential property etc. form investments in Real Estate.
Real Estate Investment Trusts (REITs): these are companies that invest in real estate, and are like stocks but subject to returning a substantial portion of their earnings as dividends to the shareholders of the REIT.
Crypto-currencies: Bitcoin, Litecoin, Etherium (Ether), etc. are the electronic currencies that have recently come on the scene as investment instruments that average people like you and I can invest in.
Bank Certificates of Deposit (CD) or Fixed Deposit (FD): This is similar to Bonds where you tell the Bank that you will keep your money for a fixed period of time for a given rate of interest on your deposit, and a guaranteed return of your initial amount deposited (also called the principal) at the maturity of the CD / FD.
Annuity: Is an insurance product where an initial sum of money is paid for the annuity, and then the annuity pays you a fixed sum of money on a monthly, quarterly, or annual basis, or may pay you a lump sum of money. The payments to you start at some future date that is written in the annuity. Upon your death, the initial sum of money you paid, to buy the annuity, goes to the insurance company that provided the annuity to you.
Other Investment Intruments: Art, Antiques, Jewelry, Cars, Coins, Stamps etc. form other forms of alternative investments.
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