In the last blog we looked at various types of investment vehicles. In this article, we’re focusing specificaly on investments in financial assets not including property and other physical assets. 

This is commonly refered to as “securities investing.” Securities typically refer to tradable financial assets such as stocks, bonds, and mutual funds, as well as other financial instruments such as options, futures, and exchange-traded funds (ETFs).

As an investor, you have a range of securities investments to choose from. While each type of investment has its own unique characteristics and risks, they all offer the potential for attractive returns. In this article, we’ll explore some of the most common securities investments available in Australia and provide insights to help you make informed investment decisions.

First on our list are stocks. When you buy shares of stock, you are essentially buying ownership in a company. Stocks offer the potential for high returns, but they can also be volatile and subject to market fluctuations. As an Australian investor, you may want to focus on stocks in the ASX 200 index, which represents the largest and most actively traded stocks in the Australian market.

Next up are bonds. When you invest in bonds, you are essentially lending money to a company or government entity. In return, you receive interest payments and the promise that your principal investment will be returned to you at the end of the bond term. Bonds are typically less volatile than stocks and can be a good way to diversify your portfolio. You may want to consider investing in Australian government bonds, which are generally considered to be among the safest investments available.

Another popular securities investment is mutual funds. A mutual fund is a pool of money from multiple investors that is managed by a professional investment manager. Mutual funds can provide diversification benefits, as well as access to a broad range of investments such as stocks, bonds, and commodities. There are many different types of mutual funds available, so it’s important to do your research and choose a fund that aligns with your investment goals.

Exchange-traded funds (ETFs) are another type of securities investment that has gained popularity in recent years. ETFs are similar to mutual funds in that they offer exposure to a diversified portfolio of investments. However, unlike mutual funds, ETFs trade on a stock exchange and can be bought and sold like individual stocks. ETFs can provide investors with low-cost, tax-efficient exposure to a broad range of markets and investment themes.

Options and futures are more advanced securities investments that are typically used by professional traders and investors. Options give the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price and date. Futures, on the other hand, are contracts that obligate the buyer and seller to transact an underlying asset at a predetermined price and date in the future. These securities investments are considered reasonably complex with a high degee of risk as it’s possibae to lose more than you bet, so they are generally not recommended for novice investors.

In conclusion, there are many different types of securities investments available to Australian investors. Whether you choose to invest in stocks, bonds, mutual funds, ETFs, or more complex financial instruments, it’s important to do your research and choose investments that align with your personal financial goals and risk tolerance. Consider working with a financial advisor who can help you determine the best investment strategy for your needs. Remember, investing is a long-term game, and success often requires patience, discipline, and a willingness to learn from your mistakes. 

Happy investing!