In finance, the notion of traditional investment refers to putting money into known assets (such as bonds, cash, real estate, and equity shares) in the hope of capital appreciation, dividends, and interest income. Traditional investment should be compared with alternative investment.
Video Traditional investments
Bond
Here, investors buy debts issued by companies or governments that promise to pay the annual return until the debt is repaid. The value of the investment changes when the general interest rate fluctuates, causing the bond to become more or less valuable.
Maps Traditional investments
Cash
In cash investments, money is usually invested in short-term, low-risk vehicles such as certificates of deposit, money market funds, and high-yield bank accounts.
Real estate
In real estate, money is used to purchase property for the purpose of holding, reselling or renting for income and there is an element of capital risk. What makes most real estate a better investment, is that the tax benefits of depreciation and low-cost financing are insured, and positive cash flows favorable real estate to build wealth compared to most other forms of investment.
Real estate housing
Investment in residential real estate is the most common form of real estate investment as measured by the number of participants as it includes property purchased as primary residence. In many cases the buyer does not have a full purchase price for the property and must borrow additional money from a bank, financial company or private lender.
Commercial real estate
Commercial real estate consists of apartments, office buildings, retail space, hotels, warehouses, and other commercial properties. Investors can purchase commercial property directly, with the help of loans, or collectively through real estate funds.
Trust real estate investments
Investing in real estate investment trust (REIT) is like investing in a collection of real estate managed by a company.
It involves buying shares in the company's equity in the hope that the stock price will increase. Buying shares in a company equals having a part of the company. Stock investments can come in the form of buying individual stocks, mutual funds, index funds, and exchange traded funds (ETF).
References
Source of the article : Wikipedia
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