The 7 Investment Types (a cheat sheet)

^{Read time - 3 minutes / Disclaimer}

The 7 investment types offer ways to:

- Grow your income.

- Build your net worth.

- Create generational wealth.

Unfortunately, the different ways aren't well known.

Investment Options

Investing is a great way to escape the 9-5 early.

But picking the wrong option can:

- Lose money.

- Create stress.

- Delay retirement.

A good way to avoid this is to learn the different options.

Stocks, property, and building a biz are common ways to invest your time or money.

But there's other options.

Some are low risk.

Some are high risk.

The simple truth—

Investing is risky.

But choosing not to invest is also risky.

Especially if you want to leave the 9-5 early to build your ideal life.

Personally—

I've tried all 7 of these ways.

I've lost money.

And I've hit a few home runs.

Here's a cheat sheet for the 7 ways to invest.

Let's dive in:

1. Owning Companies

Buying company stock.

Stocks make you part owner of a business.

There's different ways to buy:

- Owning stock directly
(like apple stock)

- Owning a mutual fund
(they own many stocks)

-Owning an ETF
aka: Exchange Traded Fund
(they too own many stocks)

The 500 largest stocks go up 11% per year on average:

^{Stock Market (last 40 years)}

Owning 1 stock = owning 1 company. Owning a fund = owning many companies.

2. Owning Debt

Becoming a lender.

Buying a bond means you're acting as a lender to:

- Governments
(cities, states, etc)

OR

- Companies
(banks, utility businesses, etc)

Owning a bond is like getting paid interest to loan out your money.

3. Owning Real Estate

Buying physical property.

There's different types like:

- Hotels

- Apartments

- Office buildings

- A residential home

Most people get a loan when buying real estate.

Some countries allow you to get a loan and buy with little money down (sometimes $0).

Here's how home prices have grown the past 20 years:

^{Changes in Home Prices}

You can also buy REITS (similar to stocks).

REIT is short for:

Real Estate Investment Trust

REITs are another way to invest in property without buying one yourself.

Real estate can be owned in different ways and offers many tax perks.

4. Owning Commodities

Buying raw materials.

Commodities are products used in business like:

- Gold

- Silver

- Livestock (cows, pigs, etc)

The price of commodities can change quickly.

For example:

The price of gold has increased 50%+ since 2024:

^{Price of Gold}

Commodities can be bought and sold electronically like buying and selling stocks.

5. Owning Alternative Investments

Buying private companies.

Alternative investments mean:

- Investing in private companies (companies that don't offer stock)

OR

- Investing in hedge funds (funds that invest in a complex way)

These types of investments often need you to have a high net worth or a high income.

But not always.

Some websites like Republic or StartEngine allow you to invest starting at $100.

Alternative investments are complex investments that can lose all of your money.

6. Owning Derivatives

A derivative is a financial contract you enter into.

Once you own the contract, its value can go up or down for different reasons like:

- Changes in interest rates.

- Changes in a stock's price.

- Changes in the price of oil.

Derivatives are complex investments that can lose money (you may owe money).

7. Owning Digital Assets

Buying virtual currency.

This is a highly debated topic.

Banks and governments now recognize crypto as an official asset class.

Heck— you can even use it to buy a home.

Bitcoin is the largest and continues to grow:

^{Price of Bitcoin}

Digital assets are the newest type of asset recognized by world governments.

Conclusion

There's many ways to invest.

A few best practices:

1—

Spend time researching an option in depth before making a move.

2—

Stick with topics you know best.

I prefer stocks (an S&P500 fund) and real estate as my primary investments.

I know these best.

Dabbling in other areas is something I like to do as well (money I could afford to lose worst case).

A phrase I heard a mentor say once worth remembering:

"Never put your current lifestyle at risk...just let time do the heavy lifting."

AKA—

Don't bet the farm on one thing, and be patient.

Keep building 💰

See you next week.