Financial investment instruments are a pool of choices that an investor can invest in. Investors can redirect their savings to these instruments to build on their existing wealth and therefore, achieve short and long term goals. There are both basic and complex financial instruments including stock investments, savings accounts, hedge funds, mutual funds, and others.
CODs or Certificate Of Deposits is broadly defined as investment accounts that are established by banks to meet individual investment needs. As compared to savings accounts, CODs pay a higher interest payment. When you buy a certificate of deposit, you have to hold it for a set amount of time in order to earn interest.
The most basic type of investment instrument is the savings account. Majority of people in America own a savings account. A savings account is established by banks and pays a specific interest on a specific deposit. The interest you earn on your savings account is calculated on a bi-annual or annual basis. All savings accounts in the US are backed and insured by the National Insurance Corporation of America. The biggest benefit of a savings account is that your money is not left idle. Instead, you earn profits for depositing your money with a bank.
Professional money managers manage mutual funds. Broadly defined, these are investment strategies that are run by experts and pay you a good amount of money for your investment. Once you buy a mutual fund, you will get your share in the fund. However, all decisions regarding the mutual fund will be the mutual fund manager. You as an investor will not have any input in the decisions. Mutual funds are diversified as compared to regular investments such as stocks. Moreover, you can always sell your mutual funds whenever you please.
Stocks are a type of financial instrument best suited for those who are interested in stock investment. Stocks allow you to get a share of ownership in your desired company. When companies decide to go public, they roll out their stocks in IPOs. After the stocks are registered, investors can buy them. You can choose to sell your stocks any time you want. Moreover, there are no guarantees that your stock will earn you money. Stocks go both up and down and there are many factors that affect the overall worth of the stocks.
Other types of financial instruments available for investing are hedge funds, bonds and precious metals. Of course, if you like the latter, you should look into Regal Assets, LLC. They help you take your retirement account and invest it in precious metals.