Types of Investments: 10 Common Options for Building Wealth
Written by
Rudri Bhatt Patel, CFHC™
Edited by
Joe Evans, CFHC™
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
When people start investing, one of the first questions they ask is: What types of investments are available?
There are many ways to invest money, each with its own risk level, potential return and time horizon. According to the U.S. Securities and Exchange Commission, diversification across multiple investment types is one of the key principles of long-term investing. Some investments focus on long-term growth, while others generate income or provide diversification during market volatility.
Understanding the main types of investments can help investors build a diversified portfolio and choose strategies that match their financial goals.
At a Glance: Major Types of Investments
Investment Type Typical Goal Risk Level Stocks Growth High Bonds Income and stability Low to moderate Mutual funds Diversification Moderate ETFs Diversification and flexibility Moderate Real estate Income and appreciation Moderate Commodities Inflation hedge Moderate to high Cryptocurrency Speculative growth High Certificates of deposit Capital preservation Low Each type of investment plays a different role within a portfolio.
1. Stocks
Stocks represent ownership in a company. When you buy shares of stock, you become a partial owner of that business. Investors typically earn money from stocks through:
- Capital appreciation (stock price increases)
- Dividend payments
Historically, stocks have delivered some of the highest long-term returns among investment options. According to data from the Federal Reserve, equities have played a major role in household wealth growth in the United States.
2. Bonds
Bonds are loans investors make to governments or corporations. When you buy a bond, the issuer agrees to repay the principal with interest over a specific time period.
Because they provide predictable payments, bonds are often used to generate income and reduce portfolio volatility. The U.S. Treasury issues Treasury bonds, which are considered among the safest investments.
3. Mutual Funds
Mutual funds pool money from many investors to buy a diversified portfolio of assets. A professional fund manager selects the investments and manages the fund. Mutual funds may invest in:
- Stocks
- Bonds
- Real estate securities
- Other assets
According to the Investment Company Institute, mutual funds are widely used by retirement savers.
4. Exchange-Traded Funds (ETFs)
ETFs are similar to mutual funds but trade on stock exchanges like individual stocks. They allow investors to buy diversified portfolios with a single transaction. Common ETF strategies include:
- Index tracking
- Sector investing
- Commodity exposure
The Securities and Exchange Commission notes that ETFs have become increasingly popular due to their flexibility and relatively low costs.
5. Real Estate
Real estate investing involves purchasing property to generate rental income or capital appreciation. Investors may participate in real estate through:
- Rental properties
- Real estate investment trusts (REITs)
- Real estate development
Real estate can provide both income and long-term appreciation. The National Association of Realtors reports that property ownership remains one of the largest sources of wealth for many households.
6. Commodities
Commodities are raw materials used in global trade. Common commodity investments include:
- Gold
- Silver
- Oil
- Agricultural products
Commodity prices often move based on supply and demand, geopolitical events and economic conditions. Many investors use commodities as a hedge against inflation.
7. Cryptocurrency
Cryptocurrency is a digital asset built on blockchain technology. Popular cryptocurrencies include:
While cryptocurrencies have gained popularity, they remain highly volatile. The Financial Industry Regulatory Authority warns that crypto investments can carry significant risk.
8. Certificates of Deposit (CDs)
Certificates of deposit are bank products that pay interest in exchange for locking money into an account for a fixed term. CDs typically offer:
- Predictable interest payments
- Low risk
- FDIC insurance
However, returns may be lower than riskier investments. According to the Federal Deposit Insurance Corporation, bank deposits are insured up to $250,000 per depositor.
9. Options and Derivatives
Options and derivatives are financial contracts whose value is tied to another asset. These instruments allow investors to speculate on price movements or hedge risk.
Because they involve leverage and complex strategies, derivatives are typically used by experienced investors.
10. Alternative Investments
Alternative investments include assets outside traditional stocks and bonds. Examples include:
- Private equity
- Hedge funds
- Art and collectibles
- Venture capital
These investments may offer diversification but often require higher minimum investments.
How Investors Build a Diversified Portfolio
Most investors combine several types of investments within a portfolio. A diversified portfolio may include:
- Stocks for long-term growth
- Bonds for stability
- Real estate for income
- Commodities for inflation protection
According to the Vanguard Group, diversification across asset classes can help reduce risk over time.
Quick Decision Guide
Looking for long-term growth? Stocks or stock ETFs may offer strong potential.
Want a stable income? Bonds or dividend investments may be useful.
Trying to diversify a portfolio? Consider combining several asset types.
Final Take to GO
There are many different types of investments, each designed to serve a specific financial purpose.
Stocks may provide growth, bonds offer stability and income and alternative investments can help diversify portfolios.
Understanding how these investment types work can help investors build balanced portfolios that align with their financial goals, risk tolerance and time horizon.
FAQ
Investors often have questions about the different types of investments available. Here are answers to common questions.- What are the main types of investments?
- The most common types include stocks, bonds, mutual funds, ETFs, real estate and commodities.
- Which type of investment is the safest?
- Lower-risk investments typically include government bonds, certificates of deposit and other insured bank products.
- Which investments offer the highest returns?
- Historically, stocks have produced some of the highest long-term returns among major asset classes.
- Why is diversification important?
- Diversification spreads investments across multiple asset classes to reduce risk.
- Are cryptocurrencies considered investments?
- Yes, but they are highly volatile and may carry greater risk compared with traditional investments.
- How do beginners start investing?
- Many beginners start with diversified funds such as index funds or ETFs before exploring other investment types.
Daria Uhlig and John Csiszar contributed to the reporting for this article.
Information is accurate as of March 16, 2026.
Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.
- Vanguard "Diversifying your portfolio"
- FDIC "Deposit Insurance FAQs"
- FINRA "Crypto Assets - Risks"
- National Association of Realtors "Homeowners Are 43 Times Wealthier Than Renters"
- Investco QQQ "The evolution of exchange-traded funds"
- Investment Company Institute "100 Years Later: Mutual Funds Driver of Wealth for Middle-Class Americans"
- CNBC "The wealth of the top 1% reaches a record $52 trillion"
- Reuters "US household net worth rebounds to record high in second quarter, Fed data shows"
