Investments for Income
Government Securities: The U.S. government borrows money in order to finance its debt and expenditures. When you purchase a U.S. Treasury note from the government, you are, in essence, loaning it money for which it pays you a fixed rate of interest. Because these notes are backed by the full faith and credit of the U.S. government, they are considered to be the safest of investments.
Corporate Bonds: The other way companies raise capital is by borrowing money from investors. A company can sell bonds to individuals, and Companies can also raise capital by issuing debt securities. An individual who owns a corporate bond is a bond holder who receives interest payments from the company. Bonds are typically issued in $1000 increments are have a fixed rate of interest attached to it. Because bonds trade actively in the open market their prices can fluctuate, however, if held to maturity, the bond holder receives the full face amount of the bond.
Bond mutual funds: As with stocks, bonds are bundled together in portfolios which are actively managed to produce income and capital appreciation for investors. Owning a portfolio of bonds is less risky for smaller investors because it is diversified and, it is more liquid.
Gold and silver: These precious metals are becoming much more popular as concerns over inflation and other economic uncertainties increase. The prices of both have risen considerably over the last decade. Gold can be purchased in its hard metal form as bullion or coins, and investors can also participate in these metals through mutual funds that focus on the stocks of mining companies.
Real estate: In recent years, real estate has become less of a sure thing as investments, however, over the long term, they can still be a good hedge against inflation. Investments such as Real Estate Investment Trusts (REIT) make it possible for smaller investors to participate in various sectors of real estate. Similar to mutual funds, REITs, invest in a portfolio of properties in either the commercial market or multi-family residential market.
All of these investments entail market risk which means there is always the possibility of selling an investment for less than its purchase price. Investors should fully understand their own tolerance for risk and should only consider investing as a long-term proposition. Market risk can be reduced through a well-conceived, broadly-diversified investment strategy consisting of multiple asset classes. Working together, we can help you identify your investment objectives and risk profile in order to create a customized, long-term investment plan.
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