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3 types of investments and practical tips to find out if they are suit

There are many types on investments and most of them can be made online.

The most common types of investments we will refer to are stocks, bonds and forex market.

Stocks are perhaps the most popular type of investment. There are many stocks to choose from, many sectors and industries they belong to, stocks which have a dividend, and companies that are both established and operate for many years. There are also companies which are new or trade for first time publicly, the so called IPOs, which offer the opportunity to investors to invest money on their potential growth prospects.

Bonds are popular too, and they are a more conservative way of investing. Bonds offer the coupon as a form of regular income and the potential for capital gains as well. Most people buy bonds for generating income at regular intervals such as 3 months, 6 months and so on. There are many bonds like municipal, or corporate bonds, and US Government bonds which are very popular and some serve as saving taxes purpose.

Forex market is another very popular method of investing or trading online, but at the same time a very risky one. It allows to buy or sell currency pairs and use margin, which magnifies profits but losses as well. You can buy or sell popular foreign exchange pairs such as EUR/USD, making a forecast if EUR or USD will strengthen or weaken. There are many forex market providers but this form of investment is very risky, most risky than the previous ones, and is only suitable to some investors, not all.

So what are the main tips to find out if stocks, bonds or forex market are suitable for you? It all start with forming and writing your own investment policy statement. An investment policy statement is a statement which can be prepared with the help of any financial professional and focuses on investing objectives and constraints. Investing objectives are the risk and return you desire and willing to take. Investment constraints are liquidity, legal or regulatory constraints, taxes, time horizon and any unique circumstances. With a written investment policy statement you understand deeply and honestly if you are willing to invest in any asset class. It is very important and the first thing you can do before deciding to invest real money in any type of investment. There are many types of investments, but not all are suitable for everyone. Dedicate time on forming your own investment policy statement, it is something you will be grateful you did over time.

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