Investment options include stocks, bonds, and mutual funds. Stocks, also known as equities, allow you to buy shares in publicly traded companies. By purchasing stocks, you’re hoping that the price will go up over time. Once the price goes up, you can sell the shares for a profit or a loss.
While stocks have a high potential for growth over time, they also carry a high level of risk. The stock market can fluctuate drastically, and it’s possible that you’ll lose money in the short run or over the long term. Depending on your personal circumstances, you may not want to invest in stocks.
Investing is a great way to build wealth over the long term, but you should always balance the risks and potential gains. Before making an investment, make sure that you have the money to make the decision. You should make sure you have a low level of debt and a sufficient emergency fund, so that you can ride out market fluctuations without having to dip into your savings.
Bonds are the safest option compared to stocks, but they also carry some risks. You can lose your money if a company or government defaults on its debt obligations. Aside from stocks, you can also invest in money market mutual funds. Money market mutual funds invest in overnight commercial paper or short-term securities. These funds offer low yields, but beat the average savings account APY.