A financial plan lets you know what kinds of investment you need to put your money in to achieve that dream. This is important because there are so many ways you can implement that financial plan.
Regular Saving Account – Small Return
The first investment that most people go for is the regular savings account but this can be barely called an investment because of the low rate of return. The only reason you should consider putting your money in a savings account is for monthly to yearly expense. It allows you quick access to cash and keeps you safe from burglars and other bad elements of society.
Stocks – Return Possible with Risks
The investments that are commonly associated to the high rate of return people want are stocks. Stocks are symbols of ownership for a company. Some companies tend to just keep the ownership with a select number of people. Others companies however make use of the stock to gain more funding and capital by offering partial ownership to the public.
You can earn more money this way but with high returns it usually comes with higher risks as well. If a transaction turns on you and does not go the way you expect it to, you can lose some or even all of the money you invested in that stock.
Bonds – Usually Time Based Return
Another wise investment would be to buy some bonds. Bonds are basically contracts that promise to pay the holder interest for a period of time in exchange for capital paid for by the holder of the bond. Some of the bonds include corporate, municipal, city and treasury bills, just to name a few.
This is relatively safe because every person is required to pay whatever they owe, unless, of course, those people can no longer pay. Then, you could be looking at a default loan and then you lose some of the capital you lost.
These are just some of the investments that you can choose from. There are still tons of other investments that can get you closer to your dreams. It is just a matter of picking the one that best suits you needs.Tags: Business Finance, Money Management, period of time, saving account