Whether you’re an experienced trader or just starting out, knowing what type of investments to secure can be intimidating. Your choices are likely to be guided by the financial markets, long-term plans, and how much risk is involved. If you’re aspiring to create a retirement planning strategy or saving for a new home, here are several financial investments that may help you reach your goal.

What Are Some Types of Financial Investments?

1. Mutual Funds

This type of investment is secured by funds provided by several investors. The collective funds are then invested in a range of different companies. Investors pay an annual fee known as an expense ratio to become mutual fund owners.

As the fund grows and earns money, each investor will typically receive a payout distribution. Investors who are building a retirement planning nest egg can also choose to sell the mutual fund and earn a profit if it has increased in value.

2. Stocks

When an investor purchases stock, they’re essentially becoming one of the issuing company’s owners. The ownership designation is known as a share. Companies that offer shares are publicly-traded, which means they’ve agreed to offer shares to the general public.

Investors earn money when the stock’s value increases or if they elect to sell it. Depending on the stock, some investors earn annual dividends based on a company’s financial earnings. 

3. Bonds

A bond’s key distinction is its fixed-income feature. The financial investment works like a typical loan. It’s typically issued to federal, state, and local government institutions and companies that are considered the borrowers.

The entities agree to pay bond owners back with interest. Because bonds will typically offer steady income payments, they’re popular investment choices for retirement planning. 

4. Certificate of Deposit

Offered by banks, credit unions, and other financial institutions, a certificate of deposit (CD) builds interest over time. A person opens up a CD with a certain amount of cash. The funds are parked in the CD for a designated term, which can range from three months to ten years.

Interests are typically higher for CDs with longer terms, which means you can earn more. To avoid early withdrawal fees, the CD funds must remain in place until the end of the designated terms. 

For expert guidance with investment choices, consult Joe Heard, CPA, in Checotah, OK. For nearly 20 years, he’s helped clients with customized and realistic retirement planning options. From estate planning to income and assets review, this accountant will listen to your financial goals and create steps for realizing them. Call (918) 473-1492 to schedule a consultation, or visit the website for the firm’s full lineup of services.