Top 12 Must-Know Different Types of Investments

3. Bonds

Bonds are debt securities issued by governments, corporations, or municipalities. When you purchase a bond, you are lending money to the issuer in exchange for interest payments and the return of your principal at maturity.

Pros:

  • Lower risk compared to stocks
  • Steady income through interest payments
  • Suitable for conservative investors
  • Government bonds are often considered safe investments

Cons:

  • Lower returns compared to stocks
  • Sensitive to interest rate fluctuations
  • Risk of default with corporate bonds
  • Inflation may reduce real returns

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