Investing can be intimidating, especially when you don’t know where to start. But with the right information and guidance, investing can become an integral part of your financial plan that could help secure your future and reach your financial goals. With this complete guide to investment vehicles, Goldstone Financial Group walks you through the different options available so that you can make informed decisions about how best to grow and protect your hard-earned money. From stocks and bonds to mutual funds, ETFs, annuities, real estate investments trusts (REITs), and more – we’ll give you all the basics on each option so that no matter what type of investor you are or stage in life you’re at, there is sure to be an appropriate: investment vehicle for it!
Goldstone Financial Group’s Guide To Investment Vehicles
According to Goldstone Financial Group, when it comes to investment vehicles, you have many options. From stocks and bonds to certificates of deposit (CDs), the choices can seem overwhelming. However, each type of investment vehicle provides certain advantages that could help you achieve your financial goals. In this guide, we will provide a detailed overview of some of the most common investment vehicles and their benefits.
Stocks are ownership shares in a publicly traded company that allow investors to reap profits when the company succeeds and its stock price rises. Stocks give investors an opportunity to build wealth over time due to their potential for long-term capital appreciation. According to data from the U.S. Securities and Exchange Commission (SEC), US equity markets saw average returns of 10% per year over the past decade. In addition, the S&P 500 Index, a commonly used benchmark for stock investments, has seen an average return of 13% per year since its inception in 1926.
Bonds are debt obligations issued by corporations or governments that pay interest at predetermined intervals and ultimately return the investor’s principal at maturity. Government bonds tend to be safer investments than corporate bonds due to their low default risk but generally have lower yields. According to data from the St. Louis Federal Reserve Bank, US government bonds yielded around 1-3% in 2020. Corporate bonds offer investors higher yields as compensation for taking on additional risk, with returns ranging from 3-10%. For example, Apple Inc., one of the largest publicly traded companies in the world, has issued corporate bonds in recent years with yields of 4-7%.
Certificates of Deposit (CDs) are low-risk investments offered by banks and credit unions that pay a fixed interest rate for a specific period. CDs can be especially attractive to those looking for guaranteed returns over a certain time horizon. According to data from Bankrate, average CD rates range from 0.15% to 0.5% for short-term CDs (6 months or less) and up to 1.3% for five year CDs. Investors should keep in mind that early withdrawals may incur penalties depending on the issuing institution’s terms and conditions.
Finally, mutual funds are investment vehicles that pool the money of many different investors to purchase a portfolio of stocks, bonds, or other securities. According to Goldstone Financial Group, mutual funds are often managed by professional investment advisors who specialize in selecting the fund’s assets and allocating them for optimal returns. According to data from the Investment Company Institute, there were 8,890 mutual funds registered with the SEC in 2020, with over $18 trillion in assets under management.
Goldstone Financial Group’s Concluding Thoughts
To summarize, each type of investment vehicle offers unique advantages that can help you reach your financial goals, says Goldstone Financial Group. While stocks offer the potential for long-term capital appreciation, bonds provide steady income, and CDs guarantee returns over fixed periods of time. Additionally, mutual funds allow investors to benefit from professional asset management without having to make their own decisions about what investments to make.