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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