An overview of securities

In the last chapters I talked about:

• Stocks
• Bonds
• Derivatives
• Commodities
• Indices
• CFDs
• Mutual funds
• Hedge funds
• ETFs

And this is not even in-depth but just the basics of how these financial instruments work and how you can use them to your advantage. You can make money from capital gains (stock or fund shares rising in price), dividends, future price predictions using derivatives, interest (bonds) and some more. 

Some options might fit you better than others, making investing a personal journey. There is no single strategy that fits all needs. But there are some strategies that would be suitable for most people in general. I’ll go in-depth about creating your own portfolio later on. 

I can safely say that most investors are looking at bonds and stocks. Where overall the bond market is much larger than the stock market. But don’t forget most mutual funds, index funds (indices) and ETFs are also based on stocks and bonds. Commodities, CFD’s, options and other derivatives are much more risky for the standard investor. Hedge funds can only be used when having a very high net worth ($1 million excluding your house). From now on I will focus mostly on stocks and bonds. 

An overview of risk versus rewards and time needed to get started:

Keep in mind that many investment types are overlapping. ETFs and Indices are practically the same, mutual funds, hedge funds, ETFs and indices are almost always based on a portfolio of stocks and bonds whereas derivatives mostly consist of commodities. They are only different in the way they approach the market. Each comes with it’s own risk reward ratio. I’ll go more in-depth in a later chapter where we will create some portfolio’s.

Also, stocks can de devided in four types of stocks we talked about before. Not all stocks have high risks and high rewards. But in general, hand picking your own stocks is considerd a high risk. 

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Chapters: The Ultimate Investing Guide