1. Stocks: Should you invest in the stock market, and, if so, how should you make the decision, as to your approach! How much risk, are you willing, to assume, and, can you afford? If you take a risky approach, while the potential, may be higher, but the potential, to lose, is higher, also! Should you buy blue – chips, small – cap, large – cap, dividend – focused, individual, stocks, and/ or, mutual funds? What are you seeking, to achieve, and what is your willingness, to accept risk? Never invest until you know, your personal objectives!
2. Bonds – government versus corporate: While, a stock represents, partial ownership, in a corporation, a bond, is a debt obligation! While, bonds may have lower risks, in many cases, that does not mean, they are risk – free. Between the time, one purchases a bond, and it comes due, the price may, and often, does, fluctuate, and, thus, if one needs liquidity, that may be a factor! In addition, it’s important to realize, bond interest rates, depend on many factors, and, that rate is usually, dependent on other rates. Because government bonds, are considered, lower risk, as well, as tax – free (wholly or partially), they generally pay, a lower rate, than corporate ones!
3. Bank/ Insurance: Parking one’s funds, either in the bank, or buying insurance, are considered, safe, secure vehicles. However, the rate – of – return, is often lower, and some bank and insurance vehicles, are far less liquid, than others!