Types of Investments: Where you can Invest your money in (2)

4. Mutual fund
Mutual funds have become extremely popular over the last 20 years. It is likely a company that brings together a group of people and invests their money in stocks, bonds, and other securities. Each investor owns shares, which represent a portion of the holdings of the fund. The primary advantage of funds is the professional management of your money. It is a relatively inexpensive way for a small investor to get a full-time manager to make and monitor investments. At the same time, risk is spread out by owning shares in a mutual fund instead of owning individual stocks or bonds.

5. Commodities
Commodities are raw materials used to create the products consumers buy. It include agricultural products such as wheat and cattle, energy products such as oil and gasoline, and metals such as gold, silver and aluminum. Commodities investment is a investment related to "future market" through a future contract, which is an agreement to buy or sell in the future a specific quantity of a commodity at a specific price.

Examples:
A farmer can sell a crop before it’s planted, even though he might get a better price in the future (which is where the name comes from.) If a boom in demand drives up prices by harvest time, the buyer of the futures contract wins. But if a bumper crop floods the market and prices plunge, our speculator could lose everything.

Commodity contracts typically let you control large amounts of gold, oil or soybeans with relatively little money, small price moves have a much bigger impact on your holdings. Those price moves can be extremely rapid and unpredictable, so Commodity investment come with very high risk.

6. Real Estate
Real estate investment involves the commitment of funds to property with an aim to generate income through rental or lease and to achieve capital appreciation. Real estate investments need a larger capital and longer period to generate returns.Investors also need a good knowledge of the real estate market. Common examples of investment properties are apartment buildings and rental houses, in which the owners do not live in the residential units, but use them to generate ongoing rental income from tenants.

The owner (landlord) earns a continuous stream of rent from the tenant, but is responsible for paying the mortgage, taxes and any costs associated with maintaining the property. The owner also benefits from capital appreciation (a rise in the value of the property over time). The landlord runs the risk of not finding a tenant and could suffer negative monthly cash flows, with mortgage payments and maintenance expenses still to be borne.