This was originally published on Monday, September 25, 2017, in the Pacific Daily News. Click here to subscribe to the PDN.
There are many types of investments and investing styles to choose. Which you choose depends on your goals. The best portfolio is a diverse one. Here are some investments that may interest you.
Bank products. Banks, credit unions and financial institutions usually provide the safest and most convenient investments. Savings accounts usually have a higher interest rates than a checking account. Money market accounts earn slightly more than a savings account and sometimes have a limit on withdrawals. Money Certificates and Certificates of Deposits earn more than your traditional savings account. These products are not risky and therefore do not earn a lot of interest.
Bonds. A bond is a loan you give to a government, a federal agency, corporation or other organization in exchange for interest payments over a term plus the original amount loaned. There are a wide variety of bonds. The most popular are Treasuries through the federal government. Some bonds fluctuate like the stock market. The risk of the bond depends on the type of bond.
Stocks. Stocks are a piece of ownership of a corporation. The money you make or lose depends on how well the company performs and the type of stock you own. Another factor is the how well the stock market performs.
Investment funds. Many investors pool their money with a specific strategy of how they will earn money. They can feature a wide variety of investment plans. Publicly offered funds must be registered with the Securities and Exchange Commission. These include mutual funds and exchanged-traded funds. Hedge funds are private and are usually exempt from registering with the SEC.
Annuities. An annuity is a contract between an insurance company and the investor. The insurance company makes periodical payments. The most common annuities are fixed and variable. They are usually tax-deferred but do have certain fees and expenses including high commissions.
Retirement. There are several ways to save for retirement and manage the income once you retire. The most popular are a 401(k) and the Individual Retirement Arrangements. Both offer tax benefits and compound your investment over time. Many larger companies offer retirement plans in which they match your contributions to a certain percentage.
Insurance. Life insurance products should be included in a financial plan. There are many forms and variations. They are usually used to meet a specific goal as you age and can be quite complex. Some of the most popular are term life, whole life, and universal life.
Real estate. Buying real estate as an investment has grown in popularity. Turn to any home improvement channel and you will find numerous shows on flipping property. Depending on the rental or selling market it can be quite lucrative. Renting real estate can be quite labor intensive and may require a security net between renters if you have a mortgage to pay on the property.
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at email@example.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.