IPM-Week-2-Types-of-Investments.pdf

1. Stocks  Stocks can also be referred to as shares or equities. Purchasing stocks means having an ownership stake in a publicly-traded company. There are several public- traded companies worldwide, and people who own stocks tend to profit from their investments.  The idea behind investing in...

1. Stocks  Stocks can also be referred to as shares or equities. Purchasing stocks means having an ownership stake in a publicly-traded company. There are several public- traded companies worldwide, and people who own stocks tend to profit from their investments.  The idea behind investing in stocks is to wait for the value of the stocks to rise before selling them at a higher price. However, like every other investment, stocks come with risks. The value of the stocks may reduce; in this case, you lose money. 2. Bonds  Purchasing bonds means lending money to an entity. It could either be a business or a government entity. For business entities, some companies issue bonds. Such types of bonds are called corporate bonds. In contrast, local governments issue municipal bonds. The US Treasury is known for issuing Treasury bonds, bills, and notes.  The lender receives interest payments during the period of the investment. After the bond has been held for the agreed period, the principal amount is returned to the lender. Compared to stocks, the returns for bonds are pretty low even though they have a lower risk. 3. Mutual Funds Investing can be done alone or in a group. For group investments, mutual funds are often used. Mutual funds refer to a pool of multiple investors’ money invested in different businesses or companies. For mutual funds to be successful, it has to be managed. It could either be actively managed or passively managed. Mutual funds are often invested in securities such as bonds, equities, derivatives, commodities, and currencies. 4. Certificates Of Deposit  People who prefer low-risk investments can always try Certificates Of Deposit (CD). Certificates of deposit entail giving bank money for some time. When the agreed period elapses, the investor receives the principal and a predetermined interest back. The longer the loan period, the higher the interest rate.  Certificates Of Deposit are a good way of saving money for an extended period. They are not associated with any major risks because they are PDIC-insured for up to P500,000. Thus, if the bank collapses, the investment is still safe. 6. A fixed deposit is a type of deposit in which a sum of money is locked for a fixed period of time. However, the tenure for the fixed deposit is decided by the person who invests his funds. This tenure could be anywhere from a few days to several years. Fixed deposit are popular as they are one of the safest investment options available in the market. The returns are guaranteed and there is no real risk of a capital loss. Moreover, they offer a better rate of interest when compared to Savings Accounts. This makes Fixed Deposits a safe yet attractive investment option for anyone looking to earn stable and predictable returns. Some tax-saving FDs can also help to save taxes. 7. A Unit Investment Trust Fund (UITF) is an open-ended pooled trust fund denominated in pesos or any acceptable currency, which is established, operated, and administered by a trust entity and made available by participation.  Each UITF product has its set of Plan Rules (Declaration of Trust) which contains the investment objectives of the UITF as well as the process for investing, operating, and administering the fund.  Most UITFs are considered medium to long-term investments, while some are designed for short-term investments.  Clients considering investing in UITFs must have investible funds that can be invested in them for a reasonable time to maximize earnings potential. Of all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a way of diversifying risk, especially through the use of futures contracts and derivatives. The gold market is subject to speculation and volatility as are other markets