Types of Investments


You have a variety of options when pursuing an investment portfolio.


With that in mind, we offer you a primer on some of the more common investment types, providing you with an overview of their characteristics. You may find value in consulting a financial professional, who will be well-versed in these investments and their associated risks, along with the role they can play in helping you achieve your financial goals.


Stocks are perhaps the most well-known investment type. When you purchase a company’s stock, or shares, you are purchasing an ownership interest in that company. Larger companies may be publicly traded, which means that you can buy stock. When you invest in stock, you are hoping that the price will increase after your purchase, which you could then sell for a profit. However, if the price of a stock falls, you will lose money if you later sell the stock. For this reason, the purchase of stock carries inherent risk.

You can purchase stock online or by working with a broker.


Bonds are typically offered by business (corporate bonds) or government entities (municipal bonds) when they are seeking to raise money. Your purchase is therefore a loan to that entity.

After your purchase, your bond accrues interest, which is payable when the bond matures. The maturity date is a predetermined duration specified in your purchase agreement. At that point, you receive your principal plus interest.

Rates of return for bonds are typically modest, though they generally carry lower risk than stocks. However, there is still risk. For instance, if you buy corporate bonds, the company could go out of business. And, if you buy government bonds, the government could default on their payment.

U.S. Treasury bonds, however, are generally considered to have lower risks than corporate and municipal bonds.

Mutual funds

A mutual fund includes investments from multiple investors, whose money is managed by a fund manager who selects the mutual fund’s securities. Mutual funds can include a variety of investments, like stocks, bonds, and other securities.

Depending on their investments, a mutual fund can carry risks similar to stocks and bonds. However, the prospect of investment diversification has the ability to lessen risk.

An index fund is a type of mutual fund that seeks to passively track an index. For instance, a NASDAQ index fund will try to mirror its performance to the NASDAQ by investing in companies from that index. These typically have lower fees because there isn’t an active fund manager.


Gold, like silver or crude oil, is a commodity that can be held as an investment. The price of commodities is based on supply as well as consumer fears, which can be impacted sharply by external factors, like political actions.

Generally, investing in gold and other commodities is considered risky.

Real estate

You can invest in real estate in several ways—purchasing and flipping homes, investing in apartments or trailer parks, purchasing a business building, among others. Generally, the cost of entry to purchase real estate is high, though there are crowd-funded real estate investment opportunities that provide buy-in for those with less cash.

You earn money on a real estate investment when you sell it at a higher price than you paid for it (after fees and expenses). There is risk associated with real estate, as market values are impacted by supply/demand and other economic factors.

These are just a few of the major investment types. There are others— annuities, retirement plans, and cryptocurrency, to name a few.

Because there are risks associated when purchasing any type of investment, you may find it helpful to consult a financial professional.


Thanks for checking out the blog. 

Gregory Armstrong , CFP®


This material is for general information only and is not intended to provide specific advice or recommendations for any
individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive
outcomes. Investing involves risks including possible loss of principal.
This material was prepared by LPL Financial.   Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and
broker-dealer (member FINRA/SIPC). 
Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL Financial affiliate, please note LPL Financial makes no representation with respect to such entity.


Securities and insurance offered through LPL or its affiliates are:


Share This Article


You May Also Like

Merging Your Money When You Marry

Getting married is exciting, but it brings many challenges. One such challenge that you and your spouse will have to face is how to merge your finances. Planning carefully and communicating clearly are important, because the financial decisions that you make now can have a lasting impact on your future.

Read More »

Caring for Your Aging Parents

Caring for your aging parents is something you hope you can handle when the time comes, but it’s the last thing you want to think about. Whether the time is now or somewhere down the road, there are steps that you can take to make your life (and theirs) a little easier.

Read More »

Am I Having Enough Withheld?

If you fail to estimate your federal income tax withholding properly, it may cost you in a variety of ways. If you receive an income tax refund, it essentially means that you provided the IRS with an interest-free loan during the year. By comparison, if you owe taxes when you file your return, you may have to scramble for cash at tax time — and possibly owe interest and penalties to the IRS as well.

Read More »

Facing the Possibility of Incapacity

Incapacity means that you are either mentally or physically unable to take care of yourself or your day-to-day affairs. Incapacity can result from serious physical injury, mental or physical illness, advancing age, and alcohol or drug abuse.

Read More »

Trust Basics

Whether you’re seeking to manage your own assets, control how your assets are distributed after your death, or plan for incapacity, trusts can help you accomplish your estate planning goals.

Read More »

Asset Protection in Estate Planning

You’re beginning to accumulate substantial wealth, but you worry about protecting it from future potential creditors. Whether your concern is for your personal assets or your business, various tools exist to keep your property safe from tax collectors, accident victims, health-care providers, credit card issuers, business creditors, and creditors of others.

Read More »

Don't Miss Anything

Stay up to date with our monthly newsletter.