Where should you put your money? The choices are enormous and depend on your personal circumstances. How much risk can you take? How much current income do you need? Do you abhor volatility? How easily you will you need to sell the investment at a fair price to raise cash? Do you nees tax breaks? Do you want the investment for your individual retirement account? Here is a list of common investments for small investors to help you make those choices. They are ranked from least risky (with generally the lowest potential returns over time) to most risky (and generally the highest potential returns over time):
Safety of principal--Degree to which original investment will keep all of its value over time if held to maturity.
Current income--Size and reliability of regular income or dividend payments from the investment, starting as soon as you make the investment.
Income growth--Ability of current income payments to grow over time.
Capital Appreciation--Ability of original investment to increase in value over time to create capital gains. For bonds and other fixed-income investments, this also includes their ability to gain value if sold before maturity if interest rates fall.
Price stability--Ability of the original investment to maintain a relatively stable value over time, avoiding volatile price swings.