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Ready to Expand Your Portfolio? Here are 5 Types of Investments You Should Know About

If you are looking to build a rock-solid portfolio that will allow you a greater degree of financial freedom, you have no doubt considered investing. Investing is one of the best long-term ways to create wealth and diversify your sources of income. With that in mind, here are five types of investments that you should know about for a stronger financial portfolio..

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Ready to Expand Your Portfolio? Here are 5 Types of Investments You Should Know About

  1. 1. Ready to expand your portfolio? Here are 5 types of investments you should know about If you are looking to build a rock-solid portfolio that will allow you a greater degree of financial freedom, you have no doubt considered investing. Investing is one of the best long-term ways to create wealth and diversify your sources of income. With that in mind, here are five types of investments that you should know about for a stronger financial portfolio. 1. Stocks A stock is simply a share of ownership in a business. There are three ways you can profit from stock investing; one way is through dividends. Dividends are your part of profit that the company you have invested in generates. In addition, your share of the company itself may increase in value over time, allowing you to sell your shares later down the line for a profit. In addition, you can profit from the value change applied to the company’s assets or profits.
  2. 2. 2. Bonds Bonds are similar to stocks, with a few key differences in the way you should approach them. Purchasing a bond from a company is lending that company money for a period of time. In exchange for your loan, the company pays you interest until the bond is due. Your bond is then paid back in full, while you keep the interest paid out to you. There are a few types of bonds you can invest in; the bonds generally considered the safest are Treasury bonds. These are bonds issued by the U.S. government and are taxable only at the federal level (which means you won’t have to pay state taxes on them.) 3. Annuities Annuities are a popular choice for retirement investing. An annuity is a financial product that insurance companies sell. If you invest in an annuity, the insurance company pays you back on a set schedule, usually semi-annualy. The attractive thing about annuities is their potential for creating a long-term, steady source of income for retirees. They can also have extremely high starting expenses, making them an unwise choice for some. 4. Mutual Funds A mutual fund is a collective pool of money that a collection of investors contributes to. A fund manager oversees this pool and invests the cash others invest to ensure maximum profit. Investing in mutual funds has become extremely popular over the years; you can buy mutual funds much like you would stock in a company, usually through a broker. Mutual funds have the benefit of reducing transaction costs for the investor. 5. 401Ks You may be lucky enough to have a 401K provided for you by your employer. If this is the case, you may still want to look over your plan to make sure you are getting the maximum benefit for your investments. There are many resources online that can help with customizing your 401K to better suit your needs; in general, your 401K is based off of the date you plan on retiring, so make sure this matches up on your 401K plan. Edward Schinik has been with the Investment Manager since 2009 and has been with one Affiliated Investment Manager since 2005.

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