When you’re considering investing, there are many vehicles to choose from. Each of them can be viable for long-term growth. However, there are unique advantages and disadvantages to each. Knowing them will help you decide what investment to choose when you talk to your financial advisors in Illinois.
A bond is a loan you give out to the government or a company. They will then pay you back with interest. By backing an entity like the US government, you eliminate the risk of losing the money you loaned. It’s a less risky investment compared to other asset classes, but it also has lower returns. You’ll know how much you get back by examining the interest rate associated with the bond.
An ETF is a type of fund that’s similar to an index but with a few key differences. Unlike other investments, the price of an ETF fluctuates throughout the day. It gives you more control over your entry and exit. You can also buy ETFs directly from an exchange like a stock.
Like other investments, the ETF’s price may increase over time, and you can later sell for a profit. Some ETFs also have dividends to investors.
A mutual fund allows investors to purchase a bag of investments with their money. They share this bag with a larger pool of investors. Then, a professional money manager oversees the investments of different asset classes. Mutual funds can either be low-risk or high-risk, depending on your preference. As the assets within increase in value, your investment also goes up.
A stock is an investment in a specific company. You are buying a piece of that company’s assets and earnings. As such, stocks increase in value significantly, but they are also prone to more risk. For example, a company can go bankrupt, and you lose your investment.
Index funds are a type of mutual fund that tracks an index. For example, the S&P 500 index will try to mirror the S&P 500. When you buy an index fund, you are investing in the stock of all companies within. Unlike mutual funds, you do not need to pay a professional manager to handle your funds. The performance will depend on all the assets within the index.
There are many ways to make money with investments. Depending on your goals, you’d want to choose one that you like or fits your risk tolerance. If you are having trouble deciding, consider hiring a financial advisor or wealth manager. Hagemann Wealth Management are financial advisors in Illinois who can help you set your investments for a confident future. Get in touch with us today!
*The opinions voice in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult with a financial professional prior to investing. All investing involves risk including loss of principal. No strategy assures success or protects against loss.