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.
Certificate of deposit (CD)
An insured, interest-bearing deposit that requires the depositor to keep the money invested for a specific period of time or face penalties. Brokered CDs can be traded on the secondary market.
Usually refers to investment risk, which is a measure of how likely it is that you could lose money in an investment. However, there are other types of risk when it comes to investing.
The sum total of your investments managed toward a specific goal.
A bond represents a loan made to a corporation or government in exchange for regular interest payments. The bond issuer agrees to pay back the loan by a specific date. Bonds can be traded on the secondary market.
Income you can receive by investing in bonds or cash investments. The investment's interest rate is specified when it's issued.
The interest and dividends generated by an investment.
Usually refers to common stock, which is an investment that represents part ownership in a corporation. Each share of stock is a proportional stake in the corporation's assets and profits.
The strategy of investing in multiple asset classes and among many securities in an attempt to lower overall investment risk.
"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.
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.
You can own pieces of companies through stocks, giving your portfolio the chance to gain value over time.
DOMESTIC OR INTERNATIONAL?
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
We're here for you
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.*
Explore professional advice
We offer expert help at the low cost you'd expect from Vanguard.
Start investing now
*Source: Donald G. Bennyhoff and Francis M. Kinniry Jr., 2016. Vanguard Advisor's Alpha®. Valley Forge, Pa.: The Vanguard Group.
Vanguard's advice services are provided by Vanguard Advisers, Inc. ("VAI"), a registered investment advisor, or by Vanguard National Trust Company ("VNTC"), a federally chartered, limited-purpose trust company.
The services provided to clients will vary based upon the service selected, including management, fees, eligibility, and access to an advisor. Find VAI's Form CRS and each program's advisory brochure here for an overview.
VAI and VNTC are subsidiaries of The Vanguard Group, Inc., and affiliates of Vanguard Marketing Corporation. Neither VAI, VNTC, nor its affiliates guarantee profits or protection from losses.