Common Investment Products You Should Know About

Women takes notes while looking at stocks and investments on a computer

If you’re interested in starting a career as a financial analyst, it’s important to get familiar with different types of investment products. According to the Bureau of Labor Statistics, some of the main responsibilities of financial analysts include helping individuals make investment decisions and assessing the performance of their clients’ portfolios. 

When you take our Asset and Portfolio Management Certificate Program, you’ll learn about the benefits and risks associated with various types of investment opportunities. We know this information can be overwhelming, especially if you’re new to the financial industry, so we’ve provided an overview of some common types of investment products you should know about as an aspiring financial professional. 

5 Types of Financial Investment Products 

With many different types of investment products available today, it can be hard to wrap your head around what they all mean. 

Below are five common investment products that you may encounter while pursuing a career in the finance industry. We hope this list gives you an idea of the topics you’ll cover when studying asset and portfolio management. 

Related: Investment Quiz: Test Your Portfolio Management Knowledge

1. Stocks

Stocks are one of the most well-known types of investment products, with about 55% of Americans invested in the stock market according to a recent poll from management consulting company Gallup. Stocks represent ownership in a publicly traded company—when you buy a share, you now own a small slice of the company’s profit. 

The value of a share is dependent on that company’s success. The goal is to sell your shares for a profit when the price of the company’s stock goes up. However, if the company’s stock price goes down—possibly because the company is underperforming or going out of business—you run the risk of losing money when you sell your shares. Stocks are one of riskier types of investments, but they can result in high returns if you sell your shares at the right time. As an asset and portfolio manager, you may choose a combination of stocks for your clients and advise on their performance.  

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2. Bonds

Bonds are essentially a type of loan in which you lend money to a bond issuer (the government, a municipality, a corporation, etc.) in exchange for interest payments plus the repayment of the principal balance once the bond reaches its maturity date. One of the advantages of bonds is that they can provide a reliable stream of income for clients—because they earn interest payments over time. 

Bond interest is usually paid to investors twice a year, the U.S. Securities and Exchange Commission notes, while the principal balance is repaid once the bond matures. Depending on the type of bond you invest in, the date of maturity could be a few years away (for a short-term bond) or upwards of 10 years away (for a long-term bond). 

In general, bonds are considered one of the safest types of investments, but the rate of return may end up being lower than that of potentially higher-risk investments such as stocks. 

3. Mutual funds 

Mutual funds are a popular option for people who prefer to have their finances professionally managed instead of choosing their own investment products. A mutual fund is a professionally managed portfolio that pools money from investors, using that money to invest in various assets such as stocks, bonds, and short-term investments. When someone invests in a mutual fund, they don’t need to make any decisions about where their money goes; you do this for them as their investment portfolio manager. 

Because investments in mutual funds are inherently diversified, this can be a less risky way of investing compared to putting all of someone’s money into a single stock or bond. Even if one asset in your fund drops in value, this represents only a small part of your share in the mutual fund. 

One specialty within the financial analysis field is fund management. Fund managers work with mutual funds or hedge funds specifically, having to quickly react to market conditions and manage their investors’ portfolios prudently. 

Related: 6 Finance Careers to Consider

4. Exchange-traded funds (ETFs)

Similar to mutual funds, exchange-traded funds (ETFs) are a collection of different assets such as stocks and bonds. They typically track a market index and are designed to replicate the same return value as the index they track. ETFs are usually passively managed, meaning they don’t have a fund manager who actively picks the investments included in the fund.

The main difference between ETFs and other types of funds is how they are bought and sold. While you buy mutual fund shares directly through a fund company, ETFs are traded on the stock exchange. As such, they can be bought and sold more flexibly and their price can fluctuate throughout the day.

5. Annuities

Some insurance companies offer investment options in the form of annuities. Annuities are a contract between an individual and an insurance company in which the company makes routine payments to the individual over a specified period of time in exchange for an initial payment. Types of annuities vary widely, with some promising a fixed payment amount and others offering a variable amount based on the value of the investment assets you choose. The duration of payments also depends on what type of annuity you buy. Annuities may be fixed, variable, or indexed, the Financial Industry Regulatory Authority (FINRA) notes.

In most cases, annuities are used as part of a retirement savings plan to help boost retirement income. They are considered a low-risk investment product, but they usually will not result in high rates of return.

Learn More About Investment Products In Our Asset and Portfolio Management Certificate Program 

If you want to learn more about the different ways to grow and diversify investments,  portfolio management courses might be right for you. There are many benefits of completing portfolio management training, including switching into a new role or industry and enhancing your knowledge of investment strategies. 

Wharton Online’s Asset and Portfolio Management Certificate Program is designed for current and aspiring financial professionals. Through this program, you’ll learn about the best practices of putting together a financial portfolio, including how to assess opportunities, diversify portfolios, and manage risk. This 100% online program allows you to work at your own pace and access on-demand lessons from Wharton professors. Explore the certificate program, or request more information today.