Investment Vehicle is an investment product that is used by the investor to get profit through income and capital gain. Investment vehicle can be low risk like fixed deposit and bond or it can carry greater risk like stocks, options and futures. The investor should understand the risk of any vehicle that they choose for investment. Intelligent investor normally holds different types of investment vehicle from low risk to high risk so that he/she can make balance each other. This is called portfolio diversification and it help to minimize risk.

Common types of investment vehicle

1 Stocks:

 Stocks are types of security that gives stockholder a share of ownership in a company. When you buy a stock, you are purchasing some portion of company. When its stock price going up you can get profit. Most of company pay stockholder some of its earning, those payments are called dividend. These kind of dividend might be cash dividend or share dividend. Company’s board decide which kind of dividend they can give.

2 Bonds:

In simple terms, bond is a loan from investor to a borrower such as company or government. The borrower uses that money to fund its operation and the investor receive the interest. This is fixed income instrument. Bond is low risk investment. Bonds are an important part of a diversify portfolio.

3 Mutual Fund:

Mutual funds are also important investment vehicle. Mutual fund pools the money from investor and invest behalf of the investor. The fund is managing by fund manager. That fund is use to purchase securities. Investor can get benefit from dividend and capital gain.

4 Real Estate:

Real Estate is one of the major investment vehicle. Over the period of time real estate value will increase and can get capital gain. Like housing and land, investor can get rental income also. Investor can take loan on mortgage of real estate. Only real estate can beat inflation in long run compare to other investment vehicle.

5 Fixed Deposit:

Fixed deposit are one of the oldest and safest investment vehicle. The interest rate is higher than other saving accounts or current accounts. Generally fixed deposit accounts tenure is one year and above. if cancel before mature of fixed deposit account, there must be fine.

6 Gold:

Gold is also one of the most famous investment vehicle. People are buying physical gold to diversify the risk. Gold is highly liquid assets; it can be easily sell to the market. Gold can be a collateral against the loan. Most of bank and financial institution give loan against of gold. Gold is also form of medium of exchange.

7 Life Insurance:

Life Insurance policy are also kind of investment vehicle. If someone buy life insurance policy firstly that policy cover policy holder’s unexpected accident, secondly it allows you to grow your wealth. After the maturity of tenure, you will get all the money with premium which is not taxable. There are mainly three types of life insurance: Whole life insurance, Universal life insurance and Term life insurance.