Saturday, December 15, 2012

How to diversify on the types of investments for your personal investment portfolio

Types of investments:

1. Cash investments
2. Fixed income investments
3. Equity investments

Cash investments

- ease of withdrawal whenever a need arises
- lower rate of return
- very little risk of losing

Examples of cash investments:

- GIC (Guaranteed investment certificate)
- Savings accounts
- T-bills (Treasury bills)
- Money market funds
- Money market mutual funds

Fixed income investments

- fixed rate of return on your investment
- lower investment risk
- generates a fixed amount of money for a certain amount of time (term)

Examples of Fixed income investments:

- Bonds
- Savings Bonds
- Government Bonds
- Mutual funds
- Fixed income mutual funds

Equity investments

- more risky than fixed income investments
- unpredictability of future growth
- although they are risky, equity investments have also the potential for bigger returns

Examples of equity investments:

- Local company or foreign stocks
- International stocks
- Global stocks
- Stock mutual funds
- Equity stocks
- Equity or Balanced mutual fund

How to diversify on the types of investments for your personal investment portfolio:

Investment strategy:
Diversification is the key. In order to diversify, you must have a balanced and correct mix of cash investments, fixed income investments, and equity investments so that you can achieve success on your financial goals. By diversifying, the potential gains from one type of investment will cover the probable loses of another type of investment. To learn more about how to diversify your investments and receive expert and professional advise, speak and discuss with your financial adviser.

No comments:

Post a Comment