Types of Investments Entrepreneurs Should Know About

Investing is an important part of preparing for the future. If you want to retire someday, investments and other retirement savings are vital for success. But if you don’t know where to start, the entire world of investments can feel intimidating. Here is a list of 7 types of investments you should know about and how they may fit into your long-term financial plan.
Treasury Bills
Every investment has some level of risk, but the lowest risk investment is one with the United States government. Treasury Bills are the closest thing to “risk-free” investing you’ll find. But where there is little risk, you’ll also find little return.
Treasury Bills are ultra-low-risk investments that many investors buy through a mutual fund or ETF. Often called “T Bills” by experienced investors, annual yields range from around 2% to 3% as of this writing in October 2018.
Certificates of Deposit
The next level up on the risk-reward scale is a bank Certificate of Deposit, or CD. CDs are a time-bound deposit account available at most banks and credit unions. Like checking and savings accounts, CDs are insured by the FDIC up to $250,000 per depositor, so there is almost no risk with this investment, though calling it an “investment” rather than a “savings” product is easily debatable.
Many banks offer IRA CDs, which work as a tax-advantaged retirement account. However, the interest you’ll get from this type of account is very low compared to stocks and bonds, which should make up the majority of investor portfolio. Depending on the rate and the term, rates today at some banks start around 0.10% for a short-term CD.
Government Bonds
The next step on the risk ladder is Government bonds. Government bonds are issued at the Federal, state, and municipal levels. Federal bonds are generally the safest type of government bond, as states and cities can run into financial problems and mismanagement that puts bond repayments in jeopardy.
Government bonds are commonly held in bond funds and target date retirement funds. While T Bills and CDs don’t offer much regarding interest, some government bonds do offer more compelling rates. But as they are backed by the “full faith and credit of the United States,” you don’t have to worry too much about losing your money with this low-risk investment.
Corporate Bonds
A corporate bond is a loan to a big company that pays you back with interest. Most individual investors don’t buy bonds directly; they own them through mutual funds and ETFs. A corporate bond offers better interest rates than government bonds for the most part, but there is also a bit more risk. If a company goes bankrupt, for example, bondholders