Alternate Investment Types

Alternate Investment Types

• Now that you have a basic understanding of the functions of a stock, its important to realize that there are other forms of investment besides trading individual shares. 

  • Bonds: debt securities, usually issued by the government or municipalities. Investors lend money to the issuer in exchange for regular interest payments that eventually mature to a greater amount than the principal purchase price. 

  • Exchange Traded Funds (ETFs): investment funds that are similar to stocks. Instead of tracking the performance of a singular corporation, it tracks the performance of an index, sector, community, or asset class. For example, you can purchase an ETF of Nasdaq, which is comprised of technology companies - almost like a basket of stocks. 

  • Real Estate Investment Trusts (REITs): Like it sounds, you can invest in these trusts which are companies that own and manage real estate properties, claiming a portion of the profits that are generated from selling and renting.

    • Dividends: Although this is not exactly an alternate investment type, meaning you can’t invest in dividends, it’s crucial to cover. Certain companies will pay dividends to their shareholders, in which an additional portion of the company’s profits will be distributed periodically (quarterly, annually).  So, if the company is performing well, you will be rewarded with the share itself increasing, as well as a bonus in dividends. Considering a company’s policy on dividends is important before purchasing shares. 

• These are just a few investment instruments that have proven to be extremely advantageous to investors. It is advisable to do your own research as to which one is best for your current financial situation and your future goals.