Types of Investments

Type of Investment	Rate of Return	Risk	Liquidity	Tax Breaks
Bank Accounts	Very, very low or none	Very, very low	Extremely Liquid	None
Money Market Funds	Very Low	Very Low	Very Liquid	None usually (Exception: some tax-free municipal bond funds)
Certificates of Deposit (CDs)	Low	Very Low	Not Liquid, unless you pay a substantial penalty	None
Bond Mutual Funds	Low to Moderate	Moderate (Interest Rate Risk)	Moderate	None usually (Exception: some tax-free municipal bond funds)
Stock Mutual Funds (Blue Chip Stocks)	Low to High	High	Moderate	When you buy & sell stocks, you only pay taxes on your capital gains when you sell them.
Stock Mutual Funds (Aggressive Growth Stocks)	Low to Very High	Very High	Moderate	When you buy & sell stocks, you only pay taxes on your capital gains when you sell them.
Real Estate (e.g., buying a house)	Varies with location	Varies with location	Not liquid. (It usually takes several months to sell a house.)	Mortgage interest payments are tax deductable

Nothing on this web site should be construed as a recommendation to buy or sell any financial assets or investments or to deal with any particular brokerage firm or other investment company.

E-mail Dr. Buck with your questions or comments.

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