Understanding the wide world of investments is the first step toward making confident financial decisions. From traditional options like stocks, bonds, and ETFs to alternatives like gold, crypto, and REITs, each investment type offers unique opportunities and risks. Whether you're planning for retirement, exploring automated strategies with robo-advisors, or learning how to choose a financial advisor, a solid grasp of the basics empowers smarter investing.
Explore some of our more popular guides to help you on your investing journey.
Investing for beginners
Investors who start early might be more likely to catch that proverbial "early bird worm", and grow their earnings enough to lead a comfortable lifestyle. If you’re ready to invest, the good news is that getting started is simpler and less expensive than ever. And with the right guidance, you could be well on your way to catching that worm.
Wise Insight— Stocks in a Nutshell
When you buy stocks, you own a share of a company, helping fund its growth. Stocks may pay dividends, and some platforms offer fractional shares for affordability. Stocks are usually common or preferred, with preferred stocks often offering regular dividends.
For many of us, investing can seem overly complicated and somewhat intimidating if you don’t know the ins and outs. Acorns intend to simplify and demystify this process through a revolutionary mobile app. The Acorns app was created to remove any mental roadblocks or anxiety about becoming a regular investor. Using Modern Portfolio Theory, it recommends optimized portfolios and keeps them on track with automatic rebalancing and dividend reinvestment. Here's our Acorns review.
Robo Advisors
Robo-advisors are specialized platforms that rely on technology and algorithms to help automate your investments. They’re generally a cheaper option than an actively-managed, full-service portfolio. Certain platforms even charge no management fees. But with that low cost comes little to no human interaction. Those seeking personalized service and investing advice from a person might not find what they’re looking for with a robo-advisor.
Financial Advisors
Alternative investments—what are they and where to invest
Looking to diversify your portfolio beyond traditional stocks and bonds? Alternative investments offer unique opportunities that can add depth and resilience to your financial strategy. From income-generating REITs to the timeless value of gold, and the growing allure of fine wine and art, these assets could help broaden your horizons and balance risk. With the right insights, you’ll be better prepared to explore the world of alternatives.
Discover our comprehensive guides to help you navigate the diverse landscape of alternative investing.
Yieldstreet is one of the best alternative investments because of the variety it offers. It has a variety of individual deals and funds covering assets like cryptocurrency, artwork, private equity, real estate and structured notes. Plus, its flagship Prism Fund provides exposure to a variety of assets and has a $2,500 minimum investment requirement.
Invest in REITs (Real Estate Investment Trusts)
REITs (Real Estate Investment Trusts) allow individuals to invest in income-generating real estate without buying property directly, offering the potential for steady dividends and long-term capital appreciation.
Wise Insight—
Shares of public REITS may be available on stock exchanges, or you could opt to invest in a REIT mutual fund or ETF. Private REITs are also available, but you may need to be an accredited investor or meet certain requirements to invest in one.
Arrived, formerly called Arrived Homes, is a real estate crowdfunding company that lets you invest in shares of rental properties. The company began in 2019 and is quickly making a name for itself as a serious, up-and-coming investment platform. And unlike many companies that focus on commercial real estate, Arrived provides access to residential real estate properties and vacation rentals. According to Arrived founder Ryan Frazier, the company's goal is to “make the wealth building potential of owning rental homes more accessible. We believe we can do that by simplifying the process, and lowering the cost to get started.”
Invest in gold
Gold is a precious metal known for its enduring value, often used by investors as a hedge against inflation and market volatility.
Wise Insight—There are many ways to invest in gold.
You can invest in gold bars or—invest in gold through ETFs, funds, mining stocks, futures contracts, or royalty companies for diverse and flexible options.
You can take advantage of the long-term market potential of this precious metal by starting a Precious Metals IRA with help from Thor Metals. Enabling investors to include gold or silver in their portfolio, a Precious Metals IRA can be a secure and stable investment option, enhancing diversification and safeguarding your cash value against economic uncertainties.
Invest in wine and art
Investing in art and wine allows individuals to diversify their portfolios with tangible assets that have the potential for significant appreciation over time. Fine art and collectible wines are considered alternative investments, often holding intrinsic value and serving as a hedge against market volatility.
Masterworks is an investment platform where you can buy fractional shares of artworks by upcoming and world-renowned artists. The company offers a straightforward investment product that’s easy to understand and facilitates investing in the kinds of art previously available only to extremely wealthy investors.According to Masterworks, contemporary art has outpaced the S&P 500 over the last 25 years and will continue to do so.
If you’re looking to diversify your portfolio by investing in wine without spending a fortune, Vinovest offers a compelling option. The platform is an excellent choice for those who want to invest in alternative assets like wine but don't want to deal with the hassle of researching, purchasing, storing, and insuring it themselves. Investors can get started in minutes, by creating an account on Vinovest's website. The platform offers a range of investment options, including a fully-managed portfolio or a self-managed portfolio.
Cryptocurrency
Cryptocurrencies are digital currencies that exist on a specific network, or blockchain. Rather than a bank acting as a middle-man, investors can exchange cryptocurrency directly over the internet. While popular cryptocurrencies like Bitcoin saw record-high values in 2024, cryptocurrency remains a largely speculative investment.
Wise Insight—Know Before You Invest in Crypto
The crypto market is also volatile and investors face regulatory uncertainties and security concerns. There was also the notable recent bankruptcy of a major cryptocurrency company, FTX. It’s best to do your research before you invest.
Retirement
Retirement plans aren’t a type of investment, but they are a popular vehicle for investing money. Retirement investing involves allocating funds into various financial instruments, such as stocks, bonds, and retirement accounts like 401(k)s or IRAs, to build a nest egg for the future. These investments offer the potential for long-term growth, tax advantages, and compound interest to help individuals achieve financial security in their later years.
Robinhood offers two types of retirement accounts: Traditional IRA and Roth IRA. You can open one of each, even if you already have an IRA at another financial institution or participate in a workplace retirement plan, like a 401(k). With zero commission fees and no minimum investment requirements, Robinhood makes it easy to start investing for retirement — but there’s even more to explore when it comes to maximizing your retirement savings.
Managing Money
Link your accounts to this powerful online platform, and Empower will give you a complete view of your net worth. Simply link your credit cards, mortgage, loans, and your investing, retirement, and bank accounts. Then Empower's net worth tracker does the rest. This tool allows you to consolidate all of your accounts in one place so you can measure your progress over time. Seeing firsthand how your accounts look — whether on your desktop or mobile device — can help you pivot your budget to focus on your goals and improve your net worth. You can even track your cryptocurrency investments with their new crypto BETA tracker.
How do investments work?
Investing your money involves purchasing a particular asset in the hopes that the value of that asset will increase over time. If an asset’s value increases and the investor opts to sell that asset, the resulting gain is called a capital gain.
But assets don’t always increase in value; sometimes they decrease too. Increases and decreases can depend on market conditions at the time you invest or sell an asset, company performance, and other factors. In general, investments that are considered higher risk offer the potential for higher returns, while lower risk investments typically provide lower returns.
Index funds
Index funds are a type of ETF or mutual fund that are designed to mimic a familiar stock market index, like the S&P 500 or the Dow Jones Industrial Average. That means that the index fund’s investments align with investments in the index it tracks. Since index funds aren’t handpicked by financial experts, they are also cheaper.
Like mutual funds and ETFs, index funds can be a good way to diversify. And because they automatically track a particular index and aren’t actively managed, they’re a fairly simple and low-cost investment.
Bonds
Companies and governments issue bonds when they need to raise money. These investments act as a loan to the issuer, which is the company or government offering the bond. Bonds are often issued to fund specific projects or finance operating costs.
In return, the issuer agrees to pay you the face value of the bond — your principal investment — plus interest. Bonds generally come with a set interest rate, and investors typically receive interest payments twice a year.
Bonds are considered a relatively safe investment, offering guaranteed returns for investors as long as the issuer can afford to repay their debts.
Certificates of deposit (CDs)
CDs are a type of savings product that offer a relatively high return. But there’s a catch: In order to earn that high return, you need to leave money in your CD account for a specific time period. CD terms commonly range from three months to 60 years. While traditional savings accounts offer an average rate of just 0.21%, a 60-month CD could earn 0.93% on average.
CDs are a low-risk product offering higher returns than traditional savings accounts, but lower potential returns than other investment types.
Options
Options are a type of contract where the value is derived from an underlying asset, like stocks, bonds, or funds. Investors who purchase an options contract have the right to buy or sell an asset for a set price within a certain timeframe.
“Put” and “call” options are the most common types of options. An investor might buy a put option if they think the price of an underlying asset will increase, or a call option if they think it will decrease.
Options are speculative and can be complicated. They’re generally a better bet for more experienced investors.
Annuities
Annuities differ from traditional investments and are contracts sold by insurance companies. This investment method is usually sought during retirement.
In exchange for purchasing an annuity with a lump sum or making monthly payments over time, you receive an “income.” The income can be deposited at regular intervals, such as three months, six months or a year. The payments are a combination of interest, capital gains and a transfer of capital from annuity holders who died earlier than expected.
Annuities can be expensive, often charging sales fees, annual fees, and withdrawal penalties. The amount of your returns is partly based on how much you invest, but is also affected by insurance information such as your age and health. They’re generally best for those with concerns about outliving their savings, and some come with the option to pay the annuity to a beneficiary after you pass away.
Commodities
Commodities are raw materials such as wheat, coffee beans, sugar, livestock, gasoline, crude oil, lumber. They can also be precious metals like gold.
Investors can choose to purchase commodities directly. Or they can invest through a commodities-focused ETF or mutual fund, or a more complicated tool like a futures contract. Buying commodities can be a useful way for experienced investors to diversify, as commodity values aren’t tied to the stock or bonds market.
Farmland
Farmland is another option for those looking to diversify their portfolio. You could invest in farmland as an alternative to real estate or in addition to it, and you don’t need to purchase and manage a farm to do so.
Platforms like AcreTrader and FarmTogether let you invest in farmland online in a matter of minutes, and you won’t bear the burden of managing a farm. Specialized farmland ETFs and funds also exist, so you could opt to invest in these as well.
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Test your investment knowledge
What's the average annual return of the S&P 500, over the last century?
Know the risks
No matter what you choose to invest in, your invested money is subject to risk. And certain investments, like cryptocurrency, may be riskier than others. Market ebbs and flows are normal.
In a bear market, the stock market decreases 20% or more from recent highs. In this environment, your stocks might make less profit and that may lead to more caution with other buys.
During a bull market, when the stock market is rising, your picks will likely be more profitable and you may be more eager to select new ones.
While you could mitigate some of your risks by diversifying your portfolio, you’ll never be able to eliminate risk completely, unless you put your money in a savings account instead. Despite the risks, investing remains one of the best ways to grow your wealth.
Ask the eight ball
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For fun investing facts
Mutual funds
While some mutual funds don’t require a minimum investment, many do. Investment minimums can range from $500 to $3,000, depending on which company you choose to invest with. Also pay attention to mutual fund loads, or sales charges, which can be up to 5% of your total investment.
How to invest in mutual funds
You can invest in mutual funds through large firms like Vanguard and Fidelity. Going this route could help you save on account fees and commissions. But you can also invest through an online brokerage, which will generally give you more mutual funds to choose from. Consider the underlying assets before you invest in a specific fund.
Keep in mind that certain mutual funds may come with investment minimums. You may also need to pay load fees and expense ratios on top of a minimum investment.
How to invest in ETFs
The process for investing in ETFs is similar to the process for investing in stocks. You can buy and sell ETFs through your brokerage account, which will likely offer many options to choose from.
Before you invest, research the underlying assets in the fund, expense ratios, and any other fees you might be required to pay.
How to invest in options
Options are a complex investment best suited for experienced investors. While many online brokers offer options trading, you typically need a margin account — or an account that lets you borrow from a broker to buy securities — to start. Depending on the platform, you may also need to get approved before you can begin buying or selling options.
Options have the potential for high returns, but they’re not beginner-friendly, and buying and selling them can be confusing. Spend some time learning about how they work before you invest. Popular platforms for options include Merrill Edge, Fidelity, Webull, and Interactive Brokers.
How to start investing in farmland
Another unique investment to help diversify your portfolio is farmland. And the good news is that you don’t need to buy and manage a farm to reap the benefits of this investment.
Instead, you can invest in this stable, non-correlated asset through a platform like FarmTogether. FarmTogether lets you earn profits from crop sales, capital appreciation, and rental payments from farmers leasing the land.
How to invest in cryptocurrency
The simplest way to invest in crypto is to create an account on a cryptocurrency exchange. These exchanges allow you to buy and sell different coins and cryptocurrencies with ease.
But it’s essential to do your due diligence before you open an account with a crypto exchange. Make sure the exchange you choose is reputable and abides by the regulations in your state. Security can be a top concern, as these platforms are often a target for hackers. Consider storing your crypto in a third-party online “wallet.”
Major exchanges include Coinbase, Gemini, and Kraken. Plan to start small if you want to invest in cryptocurrency, as this asset can be volatile.
Investing FAQ
Jess is a financial writer who's been creating digital content since 2009. Before transitioning to full-time freelance writing, she was an editor at Investopedia and The Balance. Her work has been published on NextAdvisor by Time, Bankrate, Investopedia, and more. In her spare time, she enjoys gardening, spending time with family, and exploring the outdoors.
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