7 Types of Traditional Investments to Consider

Investing is a smart way to grow your wealth over time, but with so many options available, it can be difficult to decide where to invest your money. Traditional investments are a tried and true way to invest your money, and there are several types to consider.

These investments offer a reliable way to diversify your portfolio, and with careful research and planning, can help you achieve your long-term financial goals.

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Traditional Investments

Investing is crucial to safeguarding your financial future, but with all the options, how do you determine where to begin?  Read on to learn more about the seven most common types of traditional investments you need to know about. 

1. Financial Institution Products

Credit unions, banks, and other financial institutions can provide a safe, convenient, and accessible way to accumulate savings by investing your money. Your investments at credit unions and banks are federally insured up to set limits, typically $250,000, by the government; so, you can rest assured that your money is safe. When shopping for investment products at a financial institution, make sure to consider your local credit union. Credit unions often offer the best rates and lowest (or no) fees. 

Types of Financial Institution Investment Products

Pros of Investing In Financial Institution Products

Cons of Investing in Financial Institution Products

2. Stocks

Investing in stocks means purchasing shares of ownership in a publicly traded company. By investing in a company’s stock, you’re hoping the company grows and performs well over time. When the company does perform well, your shares may become more valuable and other investors may be willing to buy them from you for more than you paid for them. If you decide to sell, you could earn a profit. Stock prices fluctuate often, so investing in the stock market is a long-term investment strategy.  

Pros of Investing in Stocks

Cons of Investing in Stocks

3. Bonds

Bonds are investment securities where an investor lends money to a company or a government for a set period in exchange for regular interest payments. Once the bond reaches maturity, the bond issuer returns the investor’s money. 

Types of Bonds

Pros of Investing in Bonds

Cons of Investing in Bonds

4. Mutual Funds

Hand-selecting stock and bond options may be too in-the-weeds for some investors, so mutual funds are the perfect solution. Mutual funds allow you to purchase many different investments in a single transaction. These funds pool money from many investors, then employ a professional manager to invest the money in stocks, bonds, and other assets. How risky a mutual fund is depends on the investments within the fund. 

Pros of Investing in Mutual Funds

Cons of Investing in Mutual Funds

5. Exchange-Traded Funds (ETFs)

Exchange-traded funds combine aspects of mutual funds and stocks. Like a mutual fund, ETFs are pooled investment funds that offer investors interest in a professionally managed, diversified investment portfolio. But unlike mutual funds, ETF shares are traded like stocks and can be bought or sold throughout the trading day at fluctuating prices. 

Pros of Investing In ETFs

Cons of Investing in ETFs

6. Index Funds

Index funds are a type of mutual fund that passively tracks an index, rather than paying a manager to pick and choose investments. These funds are designed to mimic the composition and performance of a particular financial market index, like the S&P 500

Pros of Investing in Index Funds

Cons of Investing in Index Funds

7. Options

Options are contracts that give the purchaser the right, but not the obligation, to buy or sell securities (like stocks or ETFs) at a fixed price within a specific period. When purchasing options, you’ll pay what’s known as a “premium” up front, which you will lose if you let the contract expire. 

Pros of Investing in Options

Cons of Investing in Options

Further Resources on Traditional Investments

Here are some further resources on traditional investment types:

Choose your next (or first) investment!

Once you’ve investigated your options and assessed how each investment type would fit your needs and financial goals, you’re ready to invest! 

A credit union investment product can be a great place to start. Credit unions typically have the best rates and lowest fees. Use our Credit Union Locator tool to find a credit union near you and discover all a credit union has to offer. 

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Did you know?

Credit unions offer an array of investment products that can be beneficial to anyone looking to build up an investment portfolio. Unlike large, for-profit banks, your local credit union is built on personalized relationships with members where lower (or no) fees and interest rates reflect their not-for-profit, member-oriented approach.

Find the right Credit Union for you

There are more than 5000 credit unions to choose from across the U.S.