In today’s markets the investor can utilize numerous vehicles to invest their hard earned dollars. As markets have become more centralized it has become increasingly easier for an investor to invest not only in their countries markets but overseas markets as well. Here are just five of the ways investors can utilise the financial markets.
Exchange Traded Funds (ETFs) have opened numerous doors for those investors who are looking to invest in corners of the market where they were unable to do so in the past. Forex ETFs have seen astronomical growth over the last several years.
Forex ETFs try to replicate/mimic the movements of currencies on the forex markets against the United States dollar (USD) or a basket of currencies. The way the ETF works for the forex market is as follows. If an investor believes that for example the euro will rise against the USD they will purchase that currency ETF. On the other hand if an investor believes that the euro will fall against the USD they would short sell the euro. Investing in the ETF market is a quick way to cash in on forex movement without having to open a forex account which has a boat load of rules and regulations associated to it.
Today, it is easier than ever to invest in the stock market. Over the last two decades on-line investing has made retail investing for most citizens a walk in the park. There are numerous online brokers along with mutual fund companies which allow you to invest and trade securities from home. Some of these companies are E-Trade, Ameritrade, Scottrade, TradeKing, Fidelity & USAA.
With access to your online account you can easily invest and trade thousands of securities, mutual funds, ETFs etc. In addition, many investors are interested in opening accounts such as margin accounts which allow the investor to leverage their potential investment dollars. Also, the investor/trader now has access to markets overseas which they most likely did not have in the past.
Many employees presently invest in 401K programs though their employer. If an individual does not invest through their employer they might invest though an IRA. When investors put money through their employer or IRA they are essentially investing indirectly in the stock market through a money management firm that allows the employee to choose which funds he/she is interested in.
Another form of investing is through the bond market. Today, governments as well as corporations raise money by issuing bonds. The issuer of bonds is the borrower who will make interest payments each year. Similar to the equity markets investors will purchase bonds as an investment. When an investor purchases bonds they will receive interest each year and will be repaid their original investment on a specified maturity date. Again, similar to the equity markets investors have the ability to trade bonds directly through their on-line brokerage accounts.
Many investors like to park their money in commodities. One of these commodities that investors will typically place their money in is gold. Gold is readily available to most investors and can be purchased either through an ETF or a dealer (banks sell gold as well). One of the most highly tracked ETF is GLD which gives the investor direct exposure to gold.
In closing, there are numerous financial vehicles where an investor may place their money. The stock market, bonds, ETFs, commodities and forex are just a small sample of those financial vehicles open to the general public.