Investment Types:

A stock is an asset that allows an individual to own a portion of a company. For example, owning five shares of Microsoft stock allows one to own the particular percentage of Microsoft that five shares is equivalent to. Although later sections will go into depth, allocating a significant portion of one’s portfolio to a stock is often a relatively risky investing option, because a significant part of one's wealth-building is dependent on a singular company’s performance. 

A bond is essentially a loan to the specific entity issuing it. For example, buying a United States Treasury bond is equivalent to providing a loan to the government that promises a certain return of interest. Additionally, local governments are able to create bonds – known as municipal bonds – to allow residents to invest in various projects associated with a particular area. Bonds are generally one of the safest assets, as their returns are nearly guaranteed, though relatively low, making them an ideal option for investors with low risk tolerance.

A mutual fund is a collection of investors putting forth individual assets to invest in a specific security – these range from stocks to bonds. Though they are decreasing in popularity in light of ETFs, they have historically been offered in great variety; each particular mutual fund offers a different investment. The advisable mutual funds to invest in usually track fundamental benchmarks, such as the S&P 500. The benefit is that they do not require much work from the investor – one simply has to check it periodically. 

Index funds are simply assets that track a certain part of the market, and they are usually made up of a large number of companies, such as the NASDAQ or the S&P 500. In order to invest in an index fund, one is able to use mutual funds or ETFS, though we recommend the usage of ETFS, as discussed later. 

An ETF, or Exchange Traded Fund, is simply a mutual fund that is more accessible and often cheaper to invest in. For Example, VOO, Vanguard’s S&P 500 ETF, tracks the top 500 most valuable companies in the United States. In terms of accessibility, one is able to trade an ETF as if it were a stock; mutual funds often are a bit tricker to handle. 

Cryptocurrency is a digital form of payment that does not require a central institution, such as a bank or company, to back it up. Blockchain technologies are used in order to ensure secure transactions, contributing to its wide and safe accessibility. Although supply and demand, just as regular stocks, affect the cryptocurrency market, news, world events, and other random events are influential on the market, making it volatile. Despite this, there are benefits to investing in it, especially when employing dollar-cost-averaging, a strategy to be discussed later.