Various Types of Investments

There are basically three types of investment: equities, bonds and cash.

Equities

When investors buy stocks, or shares, they own a part of the company that issued the shares. The value of shares could fluctuate along with the stock market as well as the expected return of individual companies. Generally speaking, the value of shares of a company will go up if its profits go up, whilst its value will go down if its profits go down.

Equities generally involve a higher level of risk but have historically provided better returns than those of bonds and cash.

Bonds

When investors buy bonds, they are lending money to issuers who are normally governments, multinationals or listed companies. Issuers are obliged to pay back the capital plus a pre-determined rate of interest and bond prices could fluctuate along with the market interest rates.

Bonds involve less risk than equities and generally provide better return than cash.

Cash

Cash is one form of investment and generally speaking it is the safest investment compared with equities and bonds.

Cash can earn interest but offers no potential for capital appreciation. It may therefore not be able to keep up with inflation.

Investment involves risks and the prices of units may go down as well as up. Past performance is not indicative of future returns. Please refer to the Explanatory Memorandum for further details.

Back to top