#invest

This article was created using AI generation along with my previous notes. AI is awesome! This list progresses from generally lower-risk to higher-risk investments.

1. Cash and Cash Equivalents

These are highly liquid, low-risk investments, but with correspondingly low returns. Their primary purpose is capital preservation.

• Savings Accounts:​ Offered by banks and credit unions.
• High-Yield Savings Accounts (HYSAs): Typically offer higher interest rates than traditional savings accounts.
• Money Market Accounts:​ A hybrid of a savings and checking account, often with check-writing privileges and a higher interest rate (though sometimes with balance requirements).
• Certificates of Deposit (CDs):​ A time deposit with a fixed term and fixed interest rate. Withdrawals before maturity incur a penalty.
• Treasury Bills (T-Bills):​ Short-term U.S. government debt securities with maturities of one year or less.

2. Fixed Income / Bonds

You are loaning money to an entity (government or corporate) in exchange for periodic interest payments and the return of the principal at maturity. Generally less risky than stocks.

Government Bonds:

U.S. Treasury Securities:

• Treasury Bills (T-Bills):​ Maturities < 1 year.
• Treasury Notes (T-Notes):​ Maturities of 2, 3, 5, 7, or 10 years.
• Treasury Bonds (T-Bonds):​ Maturities of 20 or 30 years.
• Treasury Inflation-Protected Securities (TIPS):​ Principal adjusts with inflation.

Municipal Bonds ("Munis"):​

Issued by states, cities, and other local government entities. Interest is often exempt from federal income tax (and sometimes state/local tax).

Corporate Bonds:​ Issued by companies to raise capital.

• Investment-Grade Bonds:​ Issued by financially stable companies (lower risk, lower yield).
• High-Yield Bonds (Junk Bonds):​ Issued by companies with lower credit ratings (higher risk, higher potential yield).

Bond Funds:​

Mutual Funds or Exchange-Traded Funds (ETFs) that hold a portfolio of many different bonds.

• Bond ETFs
• Bond Mutual Funds

3. Equities / Stocks

You are buying a small ownership stake (a share) in a publicly traded company. Offers higher growth potential but with higher risk.

Common Stocks:​

Grants ownership and voting rights, with potential for capital appreciation and dividends. Dividends can only be paid after preferred stock dividends, dividends not fixed

Preferred Stocks:​

A hybrid between a stock and a bond. Typically offers fixed dividends and has priority over common stock in bankruptcy, but usually doesn't have voting rights. Dividends can only be paid after fulfilling interest payment to debt holders, scheduled fixed dividends.

优先股：是一种权益，具有股权和债券的双重特性，但它通常被归入固定收益类。这是因为它类似于债券，承诺支付特定的股息流 优先股和债券的根本区别在于优先股股息的分派是由董事会酌情决定的，而债券利息的支付是强制性的。

Stock Funds:​

Funds that hold a basket of many different stocks.

• Mutual Funds:​ Professionally managed pools of money from many investors.
• Exchange-Traded Funds (ETFs):​ Like mutual funds but trade on an exchange like a stock throughout the day.

Sectors & Styles:​

Ways to categorize stock investments.

• By Size:​ Large-Cap, Mid-Cap, Small-Cap.
• By Style:​ Growth Stocks, Value Stocks, Blend.
• By Geography:​ Domestic (U.S.) Stocks, International Stocks, Emerging Market Stocks.

4. Real Estate

Investing in physical property or real estate-related assets.

Direct Ownership:

• Primary Residence
• Rental Properties​ (e.g., single-family homes, multi-unit apartments)
• Commercial Real Estate​ (e.g., office buildings, retail spaces)

Indirect Ownership:

• Real Estate Investment Trusts (REITs):​ Companies that own, operate, or finance income-producing real estate. Traded like stocks.
• Real Estate Crowdfunding:​ Online platforms that pool money from multiple investors to fund real estate projects.
• Real Estate ETFs & Mutual Funds:​ Funds that hold a portfolio of REITs or real estate companies.

5. Commodities

Investing in physical raw materials or primary agricultural products.

• Precious Metals:​ Gold, Silver, Platinum.
• Energy:​ Crude Oil, Natural Gas.
• Agricultural Goods:​ Wheat, Corn, Soybeans.
• Metals:​ Copper, Aluminum.

How to Invest:

• Futures Contracts​ (direct but complex)
• Commodity ETFs & Mutual Funds
• Shares of Commodity-Related Companies​ (e.g., oil company stock, gold miner stock)
• Physical Bullion​ (e.g., gold bars, silver coins)

6. Alternative Investments

Non-traditional assets that don't fit into the standard categories.

Cryptocurrencies:​

Digital or virtual currencies like Bitcoin and Ethereum. (Extremely high risk and volatility).

Collectibles:​

Items valued for their rarity and desirability.

• Art
• Vintage Cars
• Stamps & Coins
• Fine Wine
• Trading Cards

Peer-to-Peer (P2P) Lending:​

Lending money to individuals or small businesses online through platforms that match lenders with borrowers.

Venture Capital / Angel Investing:​

Providing capital to startup companies in exchange for equity. (Typically very high risk and limited to accredited investors).

Hedge Funds:​

Pooled funds that use aggressive, complex strategies. (Generally limited to accredited investors due to high risk and high minimums).

Derivatives

A type of financial contract between two or more parties, the value of a derivative is derived from fluctuations in the price of an underlying asset

• future: the parties agree a price in the present for a deal that will, in effect, happen in the future
• option: fix the price for a future deal but with options the buyer is not obliged to make the transaction

Options

• Call: Long give right to buy an assert at specified price on a specific date
• Put: Short sell

A derivatives instrument where the buyer has the right to take up certain shares on specified terms within or at a specified time. A derivative security that gives the holder a contractual right to buy or sell a set amount of a stock, commodity, or other asset at a specified price on or before the option’s expiration date. An option is purchased for a fee, called a premium.

1I’ve never bought a future nor an option in my entire investing career, and I can’t imagine buying one now.
2Actually I do know a few things about options. I know that the large potential return is attractive to many small investors who are dissatisfied with getting rich slow. Instead, they opt for getting poor quick. That’s because an option is a contract that’s only good for a month or two, and unlike most stocks, it regularly expires worthless—after which the options player must buy another option, only to lose 100 percent of his or her money once again. A string of these, and you’re in deep kimchee.
3
4From One Up On Wall Street

7. Retirement Accounts (Tax-Advantaged Vehicles)

These are not investments themselves, but special accounts that hold your investments and offer tax benefits. China has its own versions.

Employer-Sponsored Plans:

• 401(k) / 403(b):​ Contributions are often made pre-tax. Many employers offer a matching contribution.
• Roth 401(k):​ Contributions are made with after-tax money, allowing for tax-free growth and withdrawals in retirement.

Individual Retirement Accounts (IRAs):

• Traditional IRA:​ Contributions may be tax-deductible; growth is tax-deferred.
• Roth IRA:​ Contributions are made with after-tax money; growth and qualified withdrawals are tax-free.

SIMPLE IRA / SEP IRA:​

Retirement plans for small business owners and self-employed individuals.

8. Gold

有很好的避险属性和保值功能：

9. Foreign Currency

这对投资者的宏观分析判断能力要求相当高，金融领域里的专业人士玩得顺溜的持续多年盈利的并不多，非专业人士放弃外汇投资可能是个明智的决定。

Written by Binwei@Shanghai