Bond Market - Bonds are certificates of debt issued by
organizations that borrow money from the public with a promise to
return the initial investment (principal) plus interest. Investors can buy
bonds from the issuing organizations or from other bond owners
through the bond market.
Futures Market - Futures are contracts entitling the buyer to receive
a certain amount of goods at a certain price at a certain time in the
future. Futures contracts can be bought from the issuers or other
Stock Market - The most popular security of them all, stocks are
ownership rights in a particular organization. They are initially
purchased from the originating company, later to be bought and sold in
the stock market.
Options Market - Options are rights to buy or sell a certain number
of securities (e.g. stocks, futures) at a certain price by a certain time.
Mutual Funds - There really is no such thing as a mutual fund
market (i.e., no mutual fund exchange, except for the closed-end type).
A mutual fund is a managed pool of investment in several types of
securities such as stocks or bonds. They are offered by investment firms,
and their prices change according to their underlying securities.
Well, that was easy. Right? Wrong. As you open the door to any one
of these investment vehicles you will soon find out that each consists of
a countless number of options - enough to make your head spin. Then
how will you ever determine which type of investment best suits your
needs? We will cover each investment vehicle in detail in the following
chapters, but first the question you need to ask yourself is why do you
want to invest? The answer will give you a good indication as to which
types of investment(s) best suit your needs. Just answering "to make
money" is too broad and isn't useful in determining your investment
strategy. Here is a list of some of the areas you may need to address as
an investor: …