Types of investment options that are available to entrepreneurs

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Forgot your Client ID? You may want to consider a range of different investment options. A diverse portfolio can help protect your wealth from market ups and downs.

There are four main types of investments, also called asset classes, each with their own benefits and risks. You can invest directly in these assets or you may prefer a managed fund that offers a range of different investments and is looked after by a professional fund manager. Learn more about the different ways to invest. Defensive investments focus on generating regular income, as opposed to growing in value over time.

The two most common types of defensive investments are cash and fixed interest. The main benefit of a cash investment is that it provides stable, regular income through interest payments. Although it is the least risky type of investment, it is possible the value of your cash could decrease over time, even though its dollar figure remains the same. This may happen if the cost of goods and services rises too quickly, also known as inflation, meaning your money buys less than it used to.

Bonds, on the other hand, basically function as loans to governments or companies , who sell them to investors for a fixed period of time and pay them a regular rate of interest. At the end of that period, the price of the bond is repaid to the investor.

Although bonds are considered a low risk investment, certain types can decrease in value over time, so you could potentially get back less money than you initially paid. Growth investments aim to increase in value over time, as well as potentially paying out income.

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Because their prices can rise and fall significantly, growth investments may deliver higher returns than defensive investments. However, you also have a stronger chance of losing money.

Defining The 3 Types Of Investments

At its simplest, a single share represents a single unit of ownership in a company. Shares are generally bought and sold on a stock exchange, via a broking platform such as CommSec. Shares are considered growth investments because their value can rise. You may be able to make money by selling shares for a higher price than you initially pay for them.

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Of course, the value of shares may also fall below the price you pay for them. Prices can be volatile from day to day and shares are generally best suited to long term investors, who are comfortable withstanding these ups and downs.

Although they have historically delivered better returns than other assets, shares are considered one of the riskiest types of investment. Similarly to shares, the value of a property may rise and you may be able to make money over the medium to long term by selling a house or apartment for more than you paid for it.

Prices are not guaranteed to rise though, and property can also be more difficult than other investment types to sell quickly, so it may not suit you if you need to be able to access your money easily. Commonwealth Securities Limited ABN 60 AFSL CommSec is a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 AFSL the Bank and a Participant of the ASX Group and Chi-X Australia. This article is intended to provide general information only and does not take into account your individual objectives, financial situation or needs.

Past performance is not necessarily indicative of future performance. You should seek independent financial and tax advice before making any decision based on this information. Log on to Netbank, CommBiz, CommSec or MyWealth Ok, got it!

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Security Online security CommSec has a range of security and privacy features protecting your account s. Guidance Different types of investments Different types of investments. Related links Information on share trading Learn about term deposits What are investment growth bonds?

Cash Fixed interest Shares Property You can invest directly in these assets or you may prefer a managed fund that offers a range of different investments and is looked after by a professional fund manager.

Defensive investments Defensive investments focus on generating regular income, as opposed to growing in value over time. High interest savings accounts The main benefit of a cash investment is that it provides stable, regular income through interest payments. Fixed interest investments include: Growth investments Growth investments aim to increase in value over time, as well as potentially paying out income.

The two most common types of growth investments are shares and property. Residential property such as houses and units Commercial property such as individual offices or office blocks Retail premises such as shops Hotel rooms or hotels Industrial property such as warehouses Similarly to shares, the value of a property may rise and you may be able to make money over the medium to long term by selling a house or apartment for more than you paid for it.

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