Investment is a key factor in achieving financial success, especially when started at a young age. By understanding the different types of investments available, you can build a strong asset portfolio and secure a stable financial future.

Let’s explore the various types of investments you can consider to achieve success early in life.

• Types of Investments Based on Assets

Investments can be categorized according to the type of assets involved. Generally, they are divided into two main categories: real assets and financial assets.

1. Real Asset Investments

Real asset investments involve tangible assets that have intrinsic value. Examples include property, gold, and collectible items such as artwork or vintage cars.

The advantage of investing in real assets is that their value tends to remain stable or even increase over time, especially during inflationary periods. For instance, property can generate returns through both appreciation in land and building value, as well as passive income from rental yields.

2. Financial Asset Investments

In contrast, financial asset investments involve non-physical assets that hold economic value, such as stocks, bonds, and mutual funds. These investments are generally more liquid than real assets, meaning they can be sold or converted into cash more easily.

However, financial assets often carry higher risks because their value fluctuates according to market and economic conditions.

• Types of Investments Based on Time Horizon

Investments can also be classified based on their time frame, short-term, medium-term, and long-term, each serving different financial goals and levels of risk.

3. Short-Term Investments

Short-term investments typically have a duration of less than one year. Examples include time deposits and certificates of deposit.

The main advantage of short-term investments is their high liquidity, allowing investors to access their funds quickly. However, the returns are generally lower compared to long-term investments.

4. Medium-Term Investments

Medium-term investments usually last between one to five years. Examples include bonds and fixed-income mutual funds.

This type of investment is ideal for those with mid-range financial goals, such as saving for a child’s education or purchasing a vehicle. Medium-term investments offer a balance between risk and return.

5. Long-Term Investments

Long-term investments extend beyond five years and include assets such as stocks, property, and gold. They are best suited for long-term financial goals such as retirement funds or purchasing a home.

When planned properly, long-term investments often yield higher returns. For example, gold is considered a relatively low-risk long-term investment that consistently appreciates in value and remains resistant to inflation.

• Examples of Common Types of Investments

To help you better understand the various investment options available, here are some popular examples to consider when building your financial portfolio.

6. Stock Investments

Stocks are among the most popular and essential types of investments. By purchasing stocks, you own a portion of a company and are entitled to a share of its profits, typically distributed as dividends.

7. Mutual Fund Investments

Mutual funds are investment instruments where money from multiple investors is pooled together and managed by professional fund managers. This option is ideal for individuals who want to diversify their investments without selecting individual stocks or bonds.

Mutual funds also offer flexibility in terms of investment duration, allowing investors to choose funds that match their risk tolerance and financial goals.

8. Time Deposit Investments

Deposits are among the safest forms of investment. They offer a fixed interest rate paid periodically over a specific time frame.

Deposits are suitable for investors seeking stability and minimal risk, though the returns tend to be lower compared to other investment types.

9. Bond Investments

Bonds are debt securities issued by corporations or governments to raise capital. In return, the issuer promises to repay the principal amount along with interest at a predetermined date.

Bonds are often considered safer than stocks, especially when issued by reputable government entities.

10. Property Investments

Property investment is a form of real asset investment involving the purchase of real estate such as houses, apartments, or land. Property offers potential profits from both value appreciation and rental income.

Although property is less liquid and requires a larger initial investment and maintenance costs, it remains a long-term investment option with the potential for significant returns.

• Gold Investments

Gold is widely regarded as a safe-haven asset because its value tends to remain stable and resistant to inflation. Gold investment is ideal for those looking for financial protection amid economic uncertainty.

Interestingly, gold can fall under both real and financial asset categories, depending on the form of investment. Here are two common types:

11. Physical Gold Investments

Physical gold includes gold bars, coins, and jewelry. This traditional form of investment remains popular among both baby boomers and millennials. Transactions are typically conducted directly through jewelry stores or certified gold dealers.

Physical gold provides a sense of ownership since it is tangible and can be used or passed down as a keepsake.

12. Digital Gold Investments

Digital gold is a modern, virtual form of gold investment accessible via smartphones. It’s an excellent choice for young investors seeking a flexible, secure, and convenient way to start investing.

Because it’s digital, transactions can be done anytime and anywhere, and storage concerns are eliminated. You can also start with a small amount, making gold investment affordable for everyone.

One of the trusted and affordable platforms for digital gold investment is Treasury, a licensed and secure digital precious metal dealer. With Treasury, you don’t need to worry about safety or legality when investing in gold.

Understanding the different types of investments is the first step toward achieving financial success at a young age. By choosing investments that align with your financial goals, you can build a strong and sustainable portfolio for the future.

Always conduct proper research and consult with financial professionals before making any investment decisions. With the right knowledge and preparation, you’ll be better equipped to face future financial challenges and achieve lasting success.