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Not all investment vehicles are created equal or work for one’s financial goals. Some provide steady income, but yield small returns on investments. Others may provide significant returns, but require a long-term investment commitment.
For investors, there is a wide variety of investment vehicles to choose from. Of the most popular are mutual funds, traditional IRAs, savings bonds or bond funds, Roth IRAs, and stocks.
Mutual funds
Mutual funds are invested in different securities which may include bonds, stocks, and/or money market securities. It is important to note that mutual funds differ from an investment trust, which issues shares in the company itself.
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This is a personal savings plan that gives tax advantages for savings retirement. Investments may include a variety of securities. Contributions in traditional IRA may be tax-deductible. However, earnings are not taxed until they are distributed. Risk levels under this type of asset vary according to the holdings in IRA.
Roth IRA
Roth IRA is another type of personal savings plan wherein the earnings that remained in the account are not taxed. Risks associated with this type of investment are relatively low.
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These are also known as fixed-income securities because the income paid is fixed once the bond is sold. Bonds and bonds funds are usually invested in corporate or government debt obligations and are usually low-risk.
Stocks
Stocks represent a share of the company. As the company’s value rises or falls, so does the value of the stocks.
Alex von Furstenberg is an expert in investing. You can find more discussions on investment at this Twitter page.
