Investment Companies:

The investment alternatives describe so far are individual securities that can be acquired from government equity, a corporation, or another individual. Investment Company sells shares in it self and uses the proceeds of these sales to acquire bonds, stocks, or other investment instruments. As a result investor how acquires shares in an investment company is a partial owner of the investment company’s portfolio of stocks or bonds. Distinguish investment companies by the types of investment instruments the will acquire.

Money Market Funds:
Money market funds are investment companies that acquire high quality, short-term investments (referred to money market instruments), such as T-bills, high grade commercial paper from various corporation or large CDs from the major money center banks. The typical minimum initial investment in a money market fund is $1000.

Bonds Funds:
Bond funds generally invest in various long-term government, corporate, or municipal bonds. They differ by the type and quality of the bonds include in the portfolio as assessed by various rating services. Specifically, the bond funds range from those that invest only risk-free government bonds and high grade corporate bonds to those that concentrate in lower rated corporate or municipal bonds, called High-yield bonds or Junk bonds.

Common Stock Funds:
Numerous common stock funds invest to achieve stated investment objectives, which can include aggressive growth, income, precious metal investments, and international stocks. Such funds offer smaller investors the benefits of diversification and professional management. They include different investment styles such as growth or value and concentrate in alternative-sized firms, including small-cap, mid-cap, large capitalization stock.

Index Funds:
Index funds are mutual funds created to equal the performances of a market index like S&P 500. Such funds appeal to passive investors who want to simply experience returns equal to some market index because either they do not want to try to “beat the market” or they believe in efficient markets.

Real Estate:

Most investors view real estate as an interesting and profitable investment alternative but believe that it is only available to a small group of experts with a lot of capital to invest. In reality, some feasible real estate investments require no detailed experts or large capital commitments.

Real Estate Investment Trusts (REITS):
A Real Estate Investment Trust is an investment fund designed to invest in various real Estate properties. It is similar to a stock or bond mutual fund, except that the money provided the investors to invest in property and building rather than a stock or bond. There are several types of REITS:

1. Construction and Development Trusts: Construction and development trusts lend the money require by builders during the initial construction of a building.

2. Mortgage Trusts: Mortgage trusts provide the long-term financing for properties. Specifically, they acquire long-term mortgages on properties once construction is completed.

3. Equity Trusts: Equity trusts own various income-producing properties such as office buildings, shopping centers, or apartment house. 

Direct Real Estate Investment:
The most common type of direct real estate investment is the purchase of a home, which is the largest investment most people ever make. There are several types of direct real estate investment:

1. Raw Land: Another direct real estate investment is purchase of raw land with the intention of selling it in the future at a profit. Raw land generally has low liquidity compare to most stocks or bonds.

2. Land Development: Land development can involve buying raw land, dividing it into individual lots, and building houses on it. Alternatively, buying land and building a shopping mall would also be considered land development.

3. Rental Property: Many investors with an interest in real estate investing acquire apartment buildings or houses with low down payments, with the intention of deriving enough income from the rents to pay the expenses of the structure, including the mortgage payments.

Low Liquidity Investments:

Most of the investment alternatives described thus fur the trade on securities markets and except the real estate, have good liquidity. The investments have very poor liquidity and financial institutions do not typically acquire them because of the liquidity and high transaction costs compared to stocks or bonds. Many of these assets are sold at auctions, causing expected prices to vary substantially. Many financial theorists view the following low-liquidity investments more as hobbies than investments.

Antiques: Dealers who acquire them at estate sales or auctions to refurbish and sell at profit earn the greatest returns from antiques. The high transaction costs and illiquidity of antiques may erode any profit that the individual may except to earn when selling these prices.

Art: The entertainment sections of newspapers or the personal finance sections of magazines often carry stories of the results of major art auction.
Coins and Stamps: Many individuals enjoy collecting coins or stamps as a hobby and as an investment. The market for coins and stamps is fragmented compared to the stock market, but it is more liquid than the market for art and antiques as indicated by the publication of weekly and monthly price lists.

Diamonds: diamonds can be and have been good investments during many periods. Still investors who purchase diamonds must realized that (a) diamonds can be highly liquid, (b) the grading process that determines their quality is quite subjective, (c) most investment-grade gems require substantial investments, and (d) they generate no positive cash flow during the holding period until the stone is sold.