Meridian Blog

I was lucky growing up, in that my dad would bring me alongside him and try to explain to me how investments worked. He opened an account for me and helped me get started at a young age. I will admit, I was much more confused than I was letting on, but that little bit of knowledge set me on track to be able to begin planning for my future. He taught me discipline with savings and investing which gave me the tiny little boost I needed to spark my curiosity so I would begin doing it myself.

In the world of investments, there are an incredible number of options (including buying options) to choose from. Let’s face it, investing can feel intimidating, especially when you are first starting out. Between stocks, bonds, ETFs, mutual funds, real estate, even crypto, how do you know what is the best choice for you? It’s easy to get overwhelmed. But here’s the thing: understanding your investment options is the first step toward taking control of your financial future.

So, let’s simplify things. Think of this as your personal guide to the most common types of investments—what they are, how they work, and who they are best suited for.

Stocks: Owning a Piece of the Action

When you buy a stock, you’re buying a small piece of a company. That means if the company does well, you benefit too—either through rising stock prices or dividends (which is a share of the profits they pay out to shareholders).

Why people like them:
Stocks have the potential for high returns over the long run. Plus, they’re pretty easy to buy and sell through most investing apps or brokerages.

What to watch for:
They can be unpredictable. Stock prices can swing a lot, and some companies don’t make it. It’s risky—but that’s the trade-off for potential high growth.

Good for:
People with a long time horizon who don’t mind a bit of volatility in exchange for long-term growth.

Bonds: Lending Your Money for a Steady Payback

Think of bonds as IOUs. When you buy a bond, you’re lending money to a company or government. In return, they promise to pay you back with interest.

Why people like them:
They are generally less risky than stocks and offer regular interest payments. Bonds can add balance to your portfolio and provide a more stable income stream.

What to watch for:
The returns are usually lower than stocks, and rising interest rates can actually make existing bond prices fall. Also, although rare, there is a chance the borrower could default.

Good for:
Investors who want more stability, especially when nearing retirement or just looking to reduce risk.

Mutual Funds: Let the Pros Do the Work

With a mutual fund, your money gets pooled together with other investors’ cash and a professional manager decides what to invest in—stocks, bonds, or a mix.

Why people like them:
They are an easy way to get diversification (spreading out your risk). You don’t have to pick individual stocks or worry about managing things day-to-day.

What to watch for:
They often come with fees—sometimes higher than other options. And while professional managers aim to beat the market, many don’t.

Good for:
People who want hands-off investing with built-in diversification.

ETFs (Exchange-Traded Funds): Like Mutual Funds, But Easier to Trade

ETFs are a lot like mutual funds, but they trade like stocks on an exchange. You can buy and sell them throughout the day, and they usually have lower fees.

Why people like them:
They are flexible, cost-effective, and offer tons of variety—ETFs can focus on industries, countries, commodities, or indexes.

What to watch for:
Some niche ETFs can be risky or thinly traded. It’s important to know what you are actually investing in.

Good for:
DIY investors who want low-cost, diversified exposure to the market.

Index Funds: Keep It Simple, Keep It Cheap

An index fund is a type of mutual fund or ETF that simply tracks a specific market index, like the S&P 500.

Why people like them:
They are cheap to own and tend to track broad parts of the market. No fancy strategies—just steady exposure to a broad market. Over time, they tend to outperform a lot of actively managed funds.

What to watch for:
You’ll never “beat” the market with these—you’ll just match it. And if the market drops, so will your fund.

Good for:
Long-term investors who want an easy, low-stress way to grow their money.

Real Estate: Investing in Property

You probably know someone who’s made money in real estate—either by renting out homes or flipping properties. You can invest directly (buying physical property) or indirectly through REITs (Real Estate Investment Trusts), which are like real estate companies you can invest in.

Why people like it:
It’s a tangible asset. Real estate can provide rental income and appreciate overtime. REITs make real estate investing more accessible and hands-off.

What to watch for:
Buying property takes a big upfront investment and can come with headaches, such as managing tenants and repairs. REITs, while easier, can be impacted by interest rates and the economy.

Good for:
People looking to diversify beyond stocks and bonds, and those interested in generating income.

Commodities: Gold, Oil, and More

Commodities are physical goods—things like gold, silver, oil, wheat, or coffee. You can invest directly (though that’s complicated) or through ETFs and futures.

Why people like them:
They can hedge against inflation and economic uncertainty. Gold, for instance, is often seen as a “safe haven” when markets get rough.

What to watch for:
Prices can swing wildly based on global events, supply and demand, or politics.

Good for:
More experienced investors looking to diversify or hedge risks.

CDs (Certificates of Deposit): Safe and Steady

A CD is like a savings account with a time lock. You deposit your money for a set period (say, 1 or 5 years) and earn interest. But if you take it out early, you’ll pay a penalty.

Why people like them:
The provide safety of your principal investment if FDIC insured (especially if they’re FDIC-insured) and give you a guaranteed return.

What to watch for:
Returns are usually low. If inflation is high, your money may not grow much in real terms.

Good for:
Risk-averse savers who want a predictable return for a set time.

Options and Derivatives: Advanced Investing Tools

Options give you the right (but not the obligation) to buy or sell a stock at a certain price by a certain date. They are part of a broader category called derivatives.

Why people like them:
They can be used to speculate or hedge risk and offer big upside potential with a small upfront cost.

What to watch for:
They’re complex, time-sensitive, and risky. It’s easy to lose your entire investment if things don’t go as planned.

Good for:
Experienced investors who understand the mechanics and want more control or leverage in their strategy.

Cryptocurrency: Digital Assets of the Future

Cryptos like Bitcoin and Ethereum have exploded in popularity. They’re digital currencies built on blockchain technology and traded on crypto exchanges.

Why people like them:
Massive growth potential, decentralization, and growing real-world use cases.

What to watch for:
They’re incredibly volatile, still largely unregulated, and prone to hacks or scams. Prices can soar—or crash—overnight.

Good for:
Tech-savvy investors with high risk tolerance and a long-term belief in the future of decentralized finance.

So, What Should You Invest In?

That depends on your goals, risk tolerance, and time horizon.

For example:

• If you’re in your 20s or 30s and want to grow your wealth? Focus on stocks, ETFs, or index funds.
• Nearing retirement? You might lean more toward bonds, CDs, and income-generating assets.

The key is to diversify—don’t put all your eggs in one basket. A mix of different investment types can help you ride out market ups and downs and stay on track toward your financial goals.

Final Thoughts

At Meridian, your financial advisor is an invaluable partner on your investing journey. While it’s possible to research and manage investments on your own, a qualified advisor brings expertise, objectivity, and personalized guidance tailored to your goals, risk tolerance, and life stage. They can help you choose the right mix of investment instruments, keep your strategy on track during market ups and downs, and make sure your financial decisions align with your bigger picture—like retirement, education planning, or building generational wealth. Most importantly, a good financial advisor helps you make confident, informed choices so you can grow your money with less stress and more clarity.