How many types of investments are there? Complete information for beginners to know

When it comes to investment, many people often misunderstand that there is only one or two methods. But in reality, how many types of investments are there? They are much more diverse than you think, ranging from selecting assets to grow resources to protecting against unforeseen events.

Understanding different types of investments will help you find suitable opportunities and diversify risks wisely because investment products are all around us. We just need to know and understand them.

11 Types of Investments Available

1. Stocks (Stocks)
2. Bonds (Bonds)
3. Mutual Funds (Mutual Funds)
4. Exchange-Traded Funds (ETFs) (ETFs)
5. Certificates of Deposit (CDs) (CDs)
6. Retirement Plans (Retirement Plans)
7. Options (Options)
8. Annuities (Annuities)
9. Derivatives (Derivatives)
10. Commodities (Commodities)
11. Hybrid Investments (Hybrid Investments)

1. Stocks: Individuals trading securities

Buying stocks, often called “playing stocks,” involves purchasing shares of a company listed on the stock exchange. This method carries high risk but also high potential returns. If you select fundamentally strong stocks with clear business models, volatility may decrease.

Returns from stock investments come from two sources:

• Dividends from company profits
• Capital gains from buying and selling

How to generate income from stocks

Stock investors are divided into 2 categories:

Technical Analysis (Technical Analysis)
Analyzing price patterns that can be plotted on charts to profit from price differences, e.g., buying Tesla (TSLA) at $200 for 100 shares (cost $20,000), then when the price rises to $270, profit is $7,000 ($70 per share)

Fundamental Analysis (Fundamental Analysis)
Viewing stocks as representatives of company profits. If a company has high profit growth, it will drive stock prices upward in the long term. This approach involves reading company news, tracking earnings, and analyzing financial ratios.

For beginners

• Study stock market fundamentals, read articles, and learn analysis techniques
• Create an investment plan, specify target companies and timeframes
• Choose a broker with reasonable fees
• Analyze stocks thoroughly using both technical and fundamental methods
• Practice with a demo account before investing real money

2. Bonds: Fixed-income debt securities

Bonds are financial instruments issued by governments, companies, or organizations to raise funds. Bondholders are creditors who receive fixed interest and principal repayment at maturity.

Income generation

Bonds offer returns in two parts:

• Fixed interest rate (Coupon) as specified
• Profit from capital gains if sold at a higher price than purchased

Example: Investing 1,000 THB in a 5% bond for 3 years will generate income from interest, compound interest, and principal repayment.

For beginners

• Study bond types, such as long-term, short-term, government, or corporate bonds
• Understand structures, interest rates, durations, and payment schedules
• Select bonds aligned with your goals; low-risk bonds have lower rates, higher-risk bonds offer higher returns

3. Mutual Funds: Managed investment

Mutual funds pool money from many investors, managed by a fund management company (Asset Management Company (AMC)). They offer high returns compared to banks, with diverse investment policies including domestic and international stocks, bonds, gold, and real estate.

How to generate income

• Use as a savings alternative
• Receive returns from various investment policies
• Invest in funds aimed at generating steady income (Passive Income)
• Benefit from tax advantages via SSF / RMF funds

Example: SSF (Super Savings Fund) is a long-term savings fund that also offers tax deductions.

For beginners

• Understand types like Equity Funds, Bond Funds, Balanced Funds
• Choose funds matching your investment goals
• Open an account at a bank or fund management company
• Regularly monitor and adjust your portfolio as needed

4. ETFs: Funds traded like stocks

ETF (Exchange Traded Fund) is an index fund that can be bought and sold on stock exchanges like stocks, with real-time prices. They track various indices such as stock markets, commodities, or bonds.

Income generation

1. Capital gains from buying low and selling high
2. Dividends from component stocks of the index

Example: Investing in an ETF tracking the S&P 500 to access the US market via iShares Core S&P 500 ETF.

For beginners

• Select ETFs aligned with your investment goals; many types and asset groups available
• Open an investment account with a trusted broker
• Make your first ETF purchase; deposited funds will buy according to current exchange rates
• Regularly review your investments and adjust your portfolio if necessary

5. Certificates of Deposit (CDs): Short- to medium-term fixed income

CD (Certificate of Deposit) is a financial asset requiring prior specification of the term, and funds cannot be withdrawn before maturity without penalty.

( Income generation

CDs offer higher interest rates than regular savings accounts, but funds are locked for the term.

) For beginners

• Clear duration: Funds are locked until maturity, which can be days, months, or up to 5 years ###maximum 5 years###
• Fixed returns: Fixed interest rates as per bank agreements
• Financial agreement: Between banks and individuals, funds, or businesses
• Income: Earn interest in exchange for locking funds; rates can be fixed or floating

6. Retirement Plans: Long-term preparation

Retirement Plans are financial mechanisms designed to prepare individuals to leave work at retirement age with sufficient funds for post-retirement expenses.

( Income generation

Calculation formula:
Amount = )Monthly expenses now × 70%### × 12 months × expected lifespan after retirement

Example:
Person A, age 35, wants to retire at 60, expects to live 20 more years, with monthly expenses of 30,000 THB, and expects post-retirement expenses to be 21,000 THB/month (252,000 THB/year)

Total amount needed = 252,000 × 20 = 5,040,000 THB

( For beginners

• Determine desired income and estimate post-retirement expenses
• Create a budget, control spending, and save regularly
• Study investment methods suitable for your risk level
• Diversify investments: stocks, bonds, ETFs, mutual funds

7. Options: Buying and selling rights

Options are financial contracts granting the right to buy or sell an asset in the future at a predetermined price and date. Two types: Call Options )Right to buy### and Put Options (Right to sell).

( Income generation

Example: On Feb 18, SET50 Index is at 930 points. Person A expects it to rise, so opens a Long S50H21C950 with a premium of 17.1 points )17.1 × 200 = 3,420 THB(.

) For beginners

• Understand terms: rights to buy, rights to sell, expiration date, strike price, market price
• Study how markets work through books, articles, online resources
• Open an options trading account with a broker offering options services

8. Annuities: Periodic payments

Annuities involve making advance or accumulated payments into a financial account to receive regular income or cover future expenses, with predetermined interest rates.

Common in daily life: mortgage payments, car loans, or monthly savings.

Income generation

Future value: Calculated from each installment, knowing the total amount at maturity.

Example: Person A and B deposit 30,000 THB/year (at year-end) to fund their child’s education, expecting a 3% annual return. How much will they have in 17 years?

For beginners

• Understand types: Fixed, Variable, Indexed
• Study how they work and their impact on investments and retirement
• Choose types matching your financial goals and risk appetite

9. Derivatives: Advanced financial contracts

Derivatives are financial contracts granting rights to buy or sell an underlying asset in the future. Buyers and sellers agree today on quantities, prices, and delivery times. Traded on TFEX (Thailand Futures Exchange).

Income generation

Investors profit from bullish and bearish markets by choosing appropriate positions:

• Call (Right to buy) profits when prices rise
• Put ###Right to sell( profits when prices fall

) For beginners

• Learn terminology: Options, Futures, Swaps
• Study each type and strategies like Covered Call, Protective Put
• Understand futures trading and risk management

10. Commodities: Investing in energy and metals

Commodities involve investing in energy, metals, and agricultural products with high intrinsic value, used globally for production and consumption. They are often used to diversify portfolios or rotate investments.

( Income generation

While physical commodities can be bought, most trading occurs via exchanges and futures contracts.

Example: OPEC reduces oil production from 22 million barrels/day to 15 million barrels/day. Supply decreases, causing WTI crude oil prices to rise from $80 to $83.

) For beginners

Advantages:

• Diversification, low or negative correlation with stocks and bonds
• Hedge against inflation

Disadvantages:

• High volatility ###up to 2x stocks, 4x bonds(

11. Hybrid Investments: Combining multiple sources

Hybrid Investments refer to funds or assets that incorporate features from various sources to reduce risk and increase income opportunities.

Example: Mixed funds combining currencies, commodities, and real estate.

) Income generation

• Invest across multiple assets: stocks, bonds, real estate, cash
• Select assets based on risk management and goals
• Continuously monitor and adjust to maintain proper diversification

( For beginners

• Set investment goals: short-term, medium-term, or long-term? Need regular income or capital growth?
• Assess risk levels: How much risk can you tolerate? Diversify accordingly
• Manage portfolio: Regularly review and rebalance as needed

Key points: Preparing before investing

Investing is a careful process. Understanding the following will help reduce risks:

🔸 Define objectives: Are you aiming for daily profit, retirement, or risk mitigation?

🔸 Understand risks: Can you handle the risks? What are your expected returns?

🔸 Study income and expenses: Know transaction fees and costs involved

🔸 Learn about investment types: Stocks, bonds, ETFs, mutual funds, real estate, derivatives

🔸 Create a financial plan: Budget, control expenses, save regularly

🔸 Stay informed: Read books, articles, reports, learn from experienced investors

🔸 Manage risks: For high-risk investments, know your risk level and have a risk management plan

🔸 Set timeframes: Short-term, medium-term, or long-term?

🔸 Review and adjust: Regularly check risk and performance

🔸 Consult professionals: If unsure, seek financial advisors or experts

Summary: Investing is diverse

How many types of investments? The answer is 11. Each has unique features. Investors should learn what types of investments exist to study their forms and price behaviors.

The more experienced and knowledgeable investors are, with clear goals, the better they can plan, diversify, and generate sustainable income.