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10 Investments You Should Know

10 Investments You Should Know

    It’s impossible to miss the fact that stocks, real estate and bonds all make for decent investments (at least most of the time). But there are so many different investment options, most of which get minimal marketing. If you want to take a look at a wider variety of options, you should be able to at least tell an American Depository Receipt apart from a Convertible Security. There are about twenty investments that any investor should at least be familiar with and the ten listed below are the first half of that list.

    1. American Depository Receipt (ADR)

    ADRs are traded on U.S. stock markets just like regular stocks, but they actually represent shares in foreign corporations. An ADR is issued by a U.S.-based bank or brokerage, which buys a large number of shares from a company based outside the U.S. Those shares are bundled into groups and then resold; they are usually labeled with a ratio representing how many shares a particular ADR represents. The sponsoring bank collects detailed financial information about any company whose shares it resells. ADRs are a relatively simple way to invest in foreign companies and avoid the administrative and duty costs of international transactions. Other countries besides the U.S. have depository receipt opportunities available.

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    2. Annuity

    Annuities provide set payments at regular intervals to their owners. You can typically purchase an annuity through an insurance company, and you’ll have several options. An annuity can either be immediate or deferred: with a deferred annuity, you will not begin receiving payments for a certain period of time. Deferred annuities are often contracted for life — they’re set up so that as long as you live, the insurance company will send you a check at a regular interval. Annuities are also either fixed (the payments are set) or variable (there is a guaranteed minimum payment, as well as payments based on the performance of an annuity investment portfolio.

    3. Closed-End Investment Fund

    A closed-end fund issues shares that are traded just like stocks but are actually closer to mutual funds in the way the are managed. Closed-end funds hold portfolios of securities — usually securities that meet very specific criteria (i.e. come from particular industries). These fund are actively managed and may hold a few investments in stocks or bonds in order to diversify, but because of their focus on particular sectors, closed-end fund issues are not considered diverse. Some closed-end funds offer dividends.

    4. Collectibles

    Collectibles can be pretty much any physical asset with a value that increases over time. While most people consider fine art, stamps and similar purchases to be collectibles, there is no strict definition that includes or excludes a particular asset. The greatest drawback to collectibles is the fact that collectibles offer no income, unlike many other investments. However, a collectible’s appreciating value often outpaces inflation.

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    5. Common Stock

    Common stock is what most of us think of when we hear the word stock: a share of ownership in a particular company. It entitles you to a portion of the company’s profits as well as voting rights. The majority of stocks traded today are common stocks. While the benefits associated with owning stock can be great, it is a relatively risky investment. If a company that you own stock in goes bankrupt, as a common shareholder, you won’t receive money until the creditors, bondholders and preferred shareholders have all been paid off.

    6. Convertible Security

    Convertible securities are either preferred stock convertibles or convertible bonds. While you would purchase a convertible bond just as you would purchase a normal bond, you would have the opportunity to convert it into common stock in the company that issued it. Depending on the terms of the convertible bond, also known as the indenture, the bond could convert into a significant number of shares. Convertible bonds do provide a small amount of income, but the real value is that the bond can be converted into common stock.

    7. Corporate Bond

    Corporations issue bonds in order to raise money: when you buy a corporate bond, you’re essentially loaning a corporation money for the length of the bond. Not only will the corporation repay you the full face value of the bond (and your loan) but it will also pay you a coupon — a predetermined interest rate paid out every six months. Corporate bonds are more lucrative than government bonds, but they are also riskier.

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    8. Futures Contract

    A futures contract is a commitment to either deliver or receive a specific quantity of a commodity during a specific month at a specific price. Most futures contract are closed out before the expected delivery date and while they can be very risky, futures contracts can also provide for a simple way to manage price risks. They can provide impressive profits, due to their higher risk factors.

    9. Life Insurance

    While life insurance may not seem like an investment on the surface, it provides a return on your monthly payments. No matter how long you may have been paying for a life insurance polity, its value is set. It’s a relatively low-risk investment because insurance is heavily regulated by the government.

    10. The Money Market

    Through the money market, you can buy fixed-income securities, primarily short-term securities that last less than a year. Unless you are able to deal in the very high denominations that most money market securities are sold in, you will likely have to purchase these securities through a money market mutual fund or bank account. Returns on money market investments are highly dependent on the current interest rate and are considered low risk.

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    Check back on Thursday for the other ten investments that you should know.

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    Last Updated on June 18, 2019

    15 Ways to Cultivate Continuous Learning for a Sharper Brain

    15 Ways to Cultivate Continuous Learning for a Sharper Brain

    Assuming the public school system didn’t crush your soul, learning is a great activity. It expands your viewpoint. It gives you new knowledge you can use to improve your life. It is important for your personal growth. Even if you discount the worldly benefits, the act of learning can be a source of enjoyment.

    “I have never let my schooling interfere with my education.” — Mark Twain

    But in a busy world, it can often be hard to fit in time to learn anything that isn’t essential. The only things learned are those that need to be. Everything beyond that is considered frivolous. Even those who do appreciate the practice of lifelong learning, can find it difficult to make the effort.

    Here are some tips for installing the habit of contiuous learning:

    1. Always have a book

    It doesn’t matter if it takes you a year or a week to read a book. Always strive to have a book that you are reading through, and take it with you so you can read it when you have time.

    Just by shaving off a few minutes in-between activities in my day I can read about a book per week. That’s at least fifty each year.

    2. Keep a “To-Learn” List

    We all have to-do lists. These are the tasks we need to accomplish. Try to also have a “to-learn” list. On it you can write ideas for new areas of study.

    Maybe you would like to take up a new language, learn a skill or read the collective works of Shakespeare. Whatever motivates you, write it down.

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    3. Get More Intellectual Friends

    Start spending more time with people who think. Not just people who are smart, but people who actually invest much of their time in learning new skills. Their habits will rub off on you.

    Even better, they will probably share some of their knowledge with you.

    4. Guided Thinking

    Albert Einstein once said,

    “Any man who reads too much and uses his own brain too little falls into lazy habits of thinking.”

    Simply studying the wisdom of others isn’t enough, you have to think through ideas yourself. Spend time journaling, meditating or contemplating over ideas you have learned.

    5. Put it Into Practice

    Skill based learning is useless if it isn’t applied. Reading a book on C++ isn’t the same thing as writing a program. Studying painting isn’t the same as picking up a brush.

    If your knowledge can be applied, put it into practice.

    In this information age, we’re all exposed to a lot of information, it’s important to re-learn how to learn so as to put the knowledge into practice.

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    6. Teach Others

    You learn what you teach. If you have an outlet of communicating ideas to others, you are more likely to solidify that learning.

    Start a blog, mentor someone or even discuss ideas with a friend.

    7. Clean Your Input

    Some forms of learning are easy to digest, but often lack substance.

    I make a point of regularly cleaning out my feed reader for blogs I subscribe to. Great blogs can be a powerful source of new ideas. But every few months, I realize I’m collecting posts from blogs that I am simply skimming.

    Every few months, purify your input to save time and focus on what counts.

    8. Learn in Groups

    Lifelong learning doesn’t mean condemning yourself to a stack of dusty textbooks. Join organizations that teach skills.

    Workshops and group learning events can make educating yourself a fun, social experience.

    9. Unlearn Assumptions

    You can’t add water to a full cup. I always try to maintain a distance away from any idea. Too many convictions simply mean too few paths for new ideas.

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    Actively seek out information that contradicts your worldview.

    Our minds can’t be trusted, but this is what we can do about it to be wiser.

    10. Find Jobs that Encourage Learning

    Pick a career that encourages continual learning. If you are in a job that doesn’t have much intellectual freedom, consider switching to one that does.

    Don’t spend forty hours of your week in a job that doesn’t challenge you.

    11. Start a Project

    Set out to do something you don’t know how. Forced learning in this way can be fun and challenging.

    If you don’t know anything about computers, try building one. If you consider yourself a horrible artist, try a painting.

    12. Follow Your Intuition

    Lifelong learning is like wandering through the wilderness. You can’t be sure what to expect and there isn’t always an end goal in mind.

    Letting your intuition guide you can make self-education more enjoyable. Most of our lives have been broken down to completely logical decisions, that making choices on a whim has been stamped out.

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    13. The Morning Fifteen

    Productive people always wake up early. Use the first fifteen minutes of your morning as a period for education.

    If you find yourself too groggy, you might want to wait a short time. Just don’t put it off later in the day where urgent activities will push it out of the way.

    14. Reap the Rewards

    Learn information you can use. Understanding the basics of programming allows me to handle projects that other people would require outside help. Meeting a situation that makes use of your educational efforts can be a source of pride.

    15 .Make Learning a Priority

    Few external forces are going to persuade you to learn. The desire has to come from within. Once you decide you want to make lifelong learning a habit, it is up to you to make it a priority in your life.

    In fact, you can train your brain to crave lifelong learning! Here’s how to become a lifelong learner:

    How to Train Your Brain to Crave Lifelong Learning (And Why It’s Good)

    More Resources About Continuous Learning

    Featured photo credit: Paul Schafer via unsplash.com

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