Each form of investing has its own benefits and risks. It's important to have enough information to make the right decisions that can deliver long-term financial benefits. Especially for beginners, it is crucial to get a comprehensive view of the different forms of investing and understand their specifics. We therefore give you a brief overview of the currently popular unconventional forms of investing:
By investing in stocks, investors become owners of shares in publicly traded companies. This gives them the opportunity for potential long-term capital growth and possible dividends. However, they bring risks such as stock price volatility, uncertainty in company performance, losses in the event of failure, and foreign exchange volatility. It is essential for everyone, not just newcomers, to educate themselves in this area, diversify their portfolios, and carefully select companies based on thorough research.
Investment funds are an efficient way of investing for investors who wish to participate in a variety of different assets without the need for direct ownership of individual securities or real estate. These funds collect capital from investors and should be managed by professional management companies. One of the main benefits is the ability to diversify the portfolio, as funds usually invest in different asset classes such as equities, bonds, commodities and real estate.
An ETF is an exchange-traded fund composed of various assets such as stocks, bonds, commodities and other funds. It provides diversification and liquidity to investors because it can be easily bought or sold on an exchange. Compared to other investment instruments, ETFs can be traded throughout the day on an exchange and are less costly to manage. A financial institution creates an ETF by buying assets from an index it wants to track and then issuing ETF shares according to that portfolio. ETFs are popular among investors looking for a simple and cost-effective investment form with diversification and liquidity.
Real estate investments are a form of investing in which investors purchase various types of real estate, including houses, apartments or commercial buildings. These investments can generate profits in two primary ways. The first is through rental income, where owners receive regular monthly income from tenants. The second way is the potential profit from the growth in property values. At the same time, it is important to consider the risks associated with these investments, such as market fluctuations, maintenance costs, as well as the time-consuming nature of property management.