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Understanding investment types

Investment options

As you put together your portfolio, you'll need to do a little digging into the different types of investments. Here's help making sense of it all.
3 minute read

Points to know

  • Most investors divide their portfolios between stocks and bonds, with potentially a small cash portion.
  • There are many different types of stocks and bonds that offer various levels of risk and reward.
  • In addition to stocks and bonds, there are other kinds of investments that add additional risk and complexity, which may not be right for everyone.

Cash investments

"Cash" investments like money markets and CDs have the least risk of all investment types. They can be used to hold money you're waiting to invest or to lower the overall risk of your portfolio.

Use cash investments for safety & security

Bond investments

Companies and governments issue bonds and then pay interest to their buyers. You can buy bonds to get income and to temper the risk of stock investments.

Use bonds for income & additional stability

Stock investments

You can own pieces of companies through stocks, giving your portfolio the chance to gain value over time.

Use stocks to add the opportunity for growth


The United States isn't the only place to find stocks and bonds. You can get even more diversification by looking beyond our borders.

Other kinds of investments

Your portfolio will probably be mostly made up of stock and bond investments, and potentially some cash. But there are other types of assets you might want, depending on your goal and how sophisticated your investment strategy is.

Learn about "hybrid" securities

Get information about call options & put options

Understand alternative investments

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If you'd like some help with your investing decisions, here are a couple of ways you can get the answers you need.

Partner with a Vanguard advisor. If you'd like a professional to oversee your portfolio for you, we can do that. Research shows that an advisor who provides professional financial planning, coaching, and portfolio oversight can add meaningful value compared with the average investor experience.*

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*Source: Francis M. Kinniry Jr., Colleen M. Jaconetti, Michael A. DiJoseph, David J. Walker, & Marcia C. Quinn, 2022. Putting a value on your value: Quantifying Vanguard Advisor's Alpha®. Valley Forge, Pa.: The Vanguard Group.

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