Stocks

• Shares of stock are small fractions of ownership in a company. Mutual funds often invest in stocks; savvy investors may prefer investing directly in stocks rather than investing in mutual funds that invest on their behalf. Stock prices go up and down with market demand; when you a buy a stock that goes up in value and then sell it at a higher price, you make a profit. Investors may buy and sell stocks through electronic stock trading services.
  
  

Bonds

• Bonds are debt securities issued by governments and businesses. When you purchase a bond, the bond issuer pays interest on the bond until a predetermined maturity date, at which time they pay back the full amount of the original purchase price. U.S. Government bonds are considered a safe investment; bonds issued by businesses may be more risky. If a company that issued bonds goes out of business, bondholders may not get their money back.
  
  

ETFs

• Exchange-Traded Funds are investments that are similar to mutual funds. Like mutual funds, ETFs invest funds they collect in a variety of underlying assets like stocks and bonds and pay returns based on the performance of the underlying assets. An important difference between ETFs and mutual funds is that investors may trade ETFs on exchanges similar to stock exchanges, while mutual funds are not traded on exchanges.
  
  

Commodities

• Commodities are goods with intrinsic value that are commonly purchased for investment purposes. Common types of commodities include oil, gold, silver, platinum, coal and various agricultural products. Mutual funds that invest in certain industries may purchase commodities. Investors can purchase and hold commodities themselves to earn returns. Another way to earn returns on the performance of commodities is to invest in stocks related to a certain commodity. For instance, if you think the price of gold will increase, you could invest in gold mining companies rather than buying physical gold.