Investment Choices
Collectibles
-Collectibles are items that are relatively rare in items.
-Paintings, sculptures, and other works are all collectibles; as we as baseball trading cards and antiques.
-Investors in collectibles don't make a profit or loss until they sell their items.
-There's a very small market for collectibles, investors view them as very high in risk.
Real Estate
-Investors buy property, such as land or buildings, hoping to generate a profit.
-If your parents own their own home, this is real estate.
-There are many other forms of real estate investments, such as malls, appartments, underdeveloped land, commercial buildings, and farmland.
-Real estate is more eaiser to sell than stocks; you have to put it on the market, wait for a buyer, negotiate the price, and then sign a contract.
Savings Account
-Often the first banking product people use, savings accounts earn a small amount of interest.
-Because the federal government guarantees the safety of these accounts, they're considered to be very low risk.
-They tend to pay low interest rates.
-You can take your money out at anytime without penalty so a savings account is a very liquid asset, meaning it can be easily converted to cash.
Stocks
-Having stock in a company means that you own part of that company.
-A company usually begins issuing shares of stock to raise money for reasons such as buying new equipment or hiring more employees.
-Investors who buy stock are called shareholders.
-Stocks are generally risky investments than income investments because you can potially lose more money.
-Over long periods of time stocks tend to make more money than income investments.
-There's no gaurntee you'll make money.
-You can sell stocks at any time.
Certificates of Deposit (CDs)
-Banks and credit unions have their own versions of savings bonds, called Certificates of Deposit.
-When you buy a CD from a financial institution, you are loaning it money for a set period of time.
-The longer the term, the higher the rate of interest paid.
-CDs usually pay a slightly higher rate of interest than savings bonds.
-Just like savings bonds if you cash them in early you will pay a few months interest.