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Investments – Types

February 17, 2025

Types Of Investments

Choosing the right type of investment can be a tricky venture. Once you have made the decision to invest your money, research and time can be a crucial part of the process to ensure success. It is important to understand the risks and benefits when weighing your options. Two critical questions to ask yourself is, how much money to invest and where to invest it. Let us look at several investment options.

American Depository Receipt (ADR) Investments

American Depository Receipt or ADR are investments that involve buying stock in companies in other countries. Basically, U.S. banks or investment companies put a certain amount of stock in its depositories. They then set the ratio of U.S. ADRs per the foreign country’s share. If the shares are worth less in the home country, then each ADR will be worth more than one share. The investor will then buy shares of that stock in U.S. dollars. The foreign companies like to use the ADR system because of the exposure they get in the U.S. Since they are traded in U.S. currency, they generally do not have duty fees. However, the depository may charge a small fee for their service. This process, in turn, allows individuals to invest in foreign stock. These investments are a good way for individuals to gain capital from emerging countries.

Annuity Investing

Annuities are simply fixed payments over a period of time. The investor makes periodic payments to a financial institution or an insurance company. The amount the investor receives is dependent upon how much is paid each period and for how long. This investment is low-risk and appeals to those wanting income. Fixed annuities have a fixed payment and are similar to government bonds and corporate bonds. They are not regulated by the Securities and Exchange Commission. Variable Annuities are regulated by SEC and allow investments in money marketing. Annuities can be deposits into a savings account, monthly insurance payments or mortgage payments. This is a good type of investment for capital appreciation that is fairly low-risk.

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Investments – Strategies

February 17, 2025

Strategies For Your Investments

Making sensible investments starts with understanding certain aspects of the investment world. Ongoing research and planning goes a long way when attempting to protect your money and save for the future. Finding the best type of investment for your individual needs can be overwhelming, especially if you are just starting out. Since investing money is such a broad area, it is essential to have a plan, or investment strategy.

Strategy #1 – Savings Bonds Investments

Considered one of the safest types of investments, savings bonds are debt securities that are issued by the United States Department of Treasury. There are two types of bonds. EE bonds are paper-type bonds that most people are familiar with, and I bonds. I bonds are somewhat different than the EE bonds. Saving bonds are a long-term investment that accrue fixed or market value interest every six months. Starting out at $25, these investments are affordable and safe. They are completely secure and will be replaced if they are lost or stolen.

Strategy #2 – 401K / RRSP Investments

A 401k plan (called an RRSP or Registered Retirement Savings Plan in Canada) is an investment in which companies allow their employees to make contributions of a specified maximum amount each year. The employers usually also make contributions by matching a certain percentage with the employee. These plans were taken on by employers as an alternative retirement plan. The employee chooses where their savings will be invested, which usually consists of a combination of stocks, bonds and money market investments. One advantage to 401k plans / RRSPs is that they are tax-deferred investments, however, they are greatly penalized if taken out prematurely.

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