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Common investments and their pros and cons

Investments can provide you with a sizeable return on your money, if done correctly. Anyone can invest, whether you do so as an individual or as a business.

There are a number of different ways you can invest your money. The following is a look at various investment strategies and their pros and cons.


CDs, or cash deposits, are a common and popular form of investing. With a CD, you give the bank a fixed amount of money, which they retain for a certain amount of time. This amount of time varies but typically goes from a few months to a few years. At the end of that period of time, you get your principle plus the interest back at a fixed rate.

CD Pros. There are a number of pros to investing in CDs, such as safety--with a CD, you will never lose money as a result of the fixed interest rate at which you are investing. A CD is also a good idea for holding an emergency stash of cash for a period of time, say three months to a year, so you will gather interest on it while not being able to spend it.

CD Cons. As a long term savings option, a CD probably isn't the best option and it locks your money up for a long time without offering as high a return as a riskier investment, such as the stock market.

Real estate

Many people are jumping on the real estate bandwagon. Investing in the real estate has become popular in recent years, and there are a number of ways in which to do so. Purchasing houses and fixing them up and selling them (called flipping houses) and buying rental properties so others can pay your mortgage for you are just a couple of ways you can invest.

Real estate pros. There are many benefits to real estate. Some of these include the potential for a very large return on your money, such as with purchasing foreclosures and then selling them; little expense if you are investing in rental properties that don't need to be fixed up, and a number of options for investing.

Real estate cons. The drawbacks of investing in real estate include a volatile market that may not return the amount you hoped for; having to spend large amounts of money unexpectedly if you are fixing up homes; and an existing good credit score as well as a large down payment in order to purchase additional properties.

Foreign treasuries

Many investors, at some point, choose to invest in foreign capital. This includes both government and corporate bonds from both developed nations as well as from emerging markets.

Foreign currency pros. Some of the pros of investing in foreign currencies include tax advantages, the potential for a high return, protection of assets, and diversifying your portfolio if the proper research is done.

Foreign currency cons. Any form of foreign currency is subject to currency risk, or the risk for loss as a result of fluctuations in the market or exchange rates against your own currency.
These are just a few types of investment strategies you can choose from and some of the pros and cons of each.

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