Stocks: Though highly volatile, stocks are the most preferred means of investment for long term. When investing in stocks, patience is the key. Firstly they are paper investments and they represent ownership in profit generating companies. Stocks also rise in value over a period of time.
Instead of investing in stocks of one company you can diversify and invest in stocks of different companies. This ensures minimum level of risk. The best part about investing in stocks is that you can invest across countries as well. However for this you need to do some solid background study to understand international companies and market. Many people buy stocks and sell it immediately as in day trading. However a buy and hold strategy helps you to gain maximum profits over the years.
Growth stocks are stocks that do not pay dividends instead the companies reinvest the profit. Apple is a good example of growth stock. At the same there are several growth stocks that go bad.
High dividend stocks are opposite of growth stocks and offer high dividends profits. However these too are risky.
Mutual Funds & ETF (Exchange Traded Funds): These are actually portfolios of a large number of stocks and bonds. Funds are perfect for people who have little or no knowledge about stocks and trading. The fund manager does all the investing; you have to choose the right funds. However one should be well read and also aware about the risks in mutual funds and ETF. You can also choose to invest in certain market sectors such as real estate, oil, and healthcare.
Real Estate: Real Estate is the next alternative to stocks. However you need to have a large capital income at hand in order to invest. Additionally also need to be patient for years to earn profit. Housing serves a dual purpose, one it provides shelter and the other over the years the cost of the property keeps increasing. However there are certain properties that might depreciate due to various factors. So, you might not earn as much as a profit that you envisioned.
Real Estate Investment Trusts (REITs): if you don’t want the hassles of buying or renting a house then REIT is the best option for you. This is similar to investing in stocks. You get dividends from mortgage financing, or equity ownership. Commercial properties usually have equities.
Tax Sheltered Retirement Schemes: Through these schemes you can add to your income and at the same time get tax benefits as well. Investing in traditional IRA or even better ROTH IRA is excellent for retirement. ROTH IRA offers tax free not tax deferred income.
Gold: Gold has always played an important role in investment history. Gold has its own advantages as long term investment. It can be easily turned into cash anywhere in the world. Gold also holds its value that is if the price reduces the value does not. Gold prices rise when inflation takes hold. The disadvantage of gold is that it does not provide dividends nor does it provide tax deductions.