Types

• The three most common types of investments are stocks, bonds and mutual funds. Each of these types of investment have different advantages and risks. The most important thing to remember with any investment, no matter how safe, is to invest only the amount that you are willing to lose.
  Stocks are a relatively risky type of investment. Most commonly, when you invest in stocks, you are buying shares in a company that produces goods. When the stock price rises, you can sell your stocks for profit, and vice versa. It is a good idea to make a long-term plan when you invest in stocks, and stick to the plan. Selling prematurely can result in a reduced profit, just as selling too late can minimize profits.
  The same rule applies to mutual funds and bonds. Both mutual funds and bonds are relatively safe investments, with the main difference between the two being liquidity. Mutual funds are extremely liquid, which means that you can quickly convert your mutual funds investment into cash. Bonds are usually not as liquid, since you must wait for your bonds to mature before you can cash them in for profit.
  
  

Benefits

• Investing your money in stocks, bonds or mutual funds allows you to easily earn money with very little effort. This is particularly true if you choose to use a low-maintenance mutual fund, which is allowed to mature for a certain length of time with little management. This practice also saves money, since you will not need to pay as large a percentage of your profits to the firm that manages your mutual funds investment.
  
  

Considerations

• Before you invest, take the time to research your options before you commit to investing in one company. Read the prospectus of mutual fund companies, look at the history of stock value in each company and check the interest rate on your bonds to get a feel for what kind of profits to expect.
  Most companies that offer stocks or mutual funds require a $1,000 initial investment, although some companies offer investment options for as low as $100. It is important to feel comfortable with your investments, so make sure that any amount you invest is an amount that you feel comfortable losing.
  
  

Time Frame

• There are two main types of investments: short term and long term. Short-term investments are intended to be made for as little as a few days, for up to 6 months. Stocks are a good example of a short-term investment, since many people invest in the stock market and then quickly sell their stocks for profit within a short period of time.
  Mutual funds are considered long-term investments, since they gradually produce a profit. When you open a mutual fund, you should be patient and allow your investment to grow for 6 months to a year or more. Bonds are also usually long-term investments. Some bonds can take several years to mature, although they can be sold at a loss any time.
  
  

Potential

• When you want to an investment that can bring in profits quickly, then consider using stock options. Your stocks investments are not going to be risk-free, however, so make sure that you thoroughly research the company that you are planning on investing in before you make your final decision. For maximum earnings from stocks, find a company that shows a history of profits, with a gradually increasing average of price per shares.
  Mutual funds are also a good way to invest, since you can easily convert your investment to cash or opt out of your investment with minimal losses. Also, mutual funds can be insured to prevent losses if your fund is through a financial institution, such as a bank. The potential of your mutual fund is limited by the current interest rates offered by your firm, so look for one that offers a higher rate over time.