ASM Investing 101

Think of the various types of investments as tools that can help you achieve your financial goals. Each broad investment type—from bank products to stocks and bonds—has its own general set of features, risk factors and ways in which they can be used by investors. Learn more about the various types of investments below and what the true purpose of invest is!

The True Purpose of Investing: Creating Income for Life

Bank Products

Banks and credit unions can provide a safe and convenient way to accumulate savings—and some banks offer services that can help you manage your money. Checking and savings accounts offer liquidity and flexibility. Find out more about these and other bank products.

Savings Accounts – These insured deposit accounts, which pay interest, give you the flexibility to make as many deposits as you like, whenever you like. They tend to have more withdrawal restrictions than checking accounts and higher minimum deposits.
Money Market Accounts – Money market accounts also are deposit accounts, giving you the safety, convenience and liquidity of a savings account, plus a slightly higher interest rate. They typically have limited check writing privileges.
Certificates of Deposit (CDs) – CDs offer predictable returns at higher interest rates than savings accounts. The tradeoff is that cannot withdraw your money without penalty for a set period of time. Most CDs are insured.

Bonds

A bond is a loan an investor makes to an organization in exchange for interest payments over a specified term plus repayment of principal at the bond’s maturity date. Learn how corporate, muni, agency, Treasury and other types of bonds work.

Stocks

When you buy shares of a company’s stock, you own a piece of that company. Stocks come in a wide variety, and they often are described based the company’s size, type, performance during market cycles and potential for short- and long-term growth. Learn more about your choices—from penny-stocks to large caps and more.

What are Stocks and Equities?
What is International Investing?

Investment Funds

Funds—such as mutual funds, closed-end funds and exchange-traded funds—pool money from many investors and invest it according to a specific investment strategy. Funds can offer diversification, professional management and a wide variety of investment strategies and styles. But not all funds are the same. Understand how they work, and research fund fees and expenses.

What are Mutual Funds? – A mutual fund is an “open-end” investment company that continually offers its shares to the public. Investors purchase and “redeem” shares directly from the mutual fund (or through a broker for the fund)—and not on an exchange. Learn about the various types of mutual funds, active and passive fund management, and how mutual funds are priced, purchased and redeemed.
What are Exchange-Traded Funds (ETFs)? – Exchange-traded funds (ETFs) combine aspects of mutual funds and conventional stocks. Like a mutual fund, an ETF is a pooled investment fund that offers an investor an interest in a professionally managed, diversified portfolio of investments. But unlike mutual funds, ETF shares trade like stocks on stock exchanges and can be bought or sold throughout the trading day at fluctuating prices.
What are Target-Date Funds?

Annuities

An annuity is a contract between you and an insurance company, in which the company promises to make periodic payments, either starting immediately—called an immediate annuity—or at some future time—a deferred annuity. Learn about the different types of annuities.

Saving for College

Funding college begins with savings, starting with how much to save. Learn the many, smart ways to save for college, including 529 College Savings Plans and Coverdell Education Savings Accounts. We’ll help you navigate your college savings options.

Retirement

Numerous types of investments come into play when saving for retirement and managing income once you retire. For saving, tax-advantaged retirement options such as a 401(k) or an IRA can be a smart choice. Managing retirement income may require moving out of certain investments and into ones that are better suited to a retirement lifestyle.

Options

Options are contracts that give the purchaser the right, but not the obligation, to buy or sell a security, such as a stock or exchange-traded fund, at a fixed price within a specific period of time. It pays to learn about different types of options, trading strategies and the risks involved.

Commodity Futures

Commodity futures contracts are agreements to buy or sell a specific quantity of a commodity at a specified price on a particular date in the future. Commodities include metals, oil, grains and animal products, as well as financial instruments and currencies. With limited exceptions, trading in futures contracts must be executed on the floor of a commodity exchange.

Security Futures

Federal regulations permit trading in futures contracts on single stocks, also known as single stock futures, and certain security indices. Learn more about security futures, how they differ from stock options and the risks they can pose.

Alternative and Complex Products

These products include notes with principal protection and high-yield bonds that have lower credit ratings and higher risk of default than traditional investments, but offer more attractive rates of return. Learn about their features, risks and potential advantages.

Real Estate Investment Trusts (REITs)
Hedge Funds
Commodities
Private Equity
Precious Metals
Senior Secured Loans

Insurance

Life insurance products come in various forms, including term life, whole life and universal life policies. There also are variations on these—variable life insurance and variable universal life—which are considered securities. See how insurance products may fit into an overall financial plan.