Lesson 1

The Different Types

of Investments
Objective:

 Identify the types of investments

particularly bank deposits,
insurance, real estate, hard assets,
mutual funds, stocks and bond
Direction: Read and answer the questions below. Write the
letter of the correct answer in your notebook or in a clean
sheet of paper.

1. Which is considered an open-end professionally managed

investment fund that pools money from many investors
particularly to purchase securities?
A. UITF C. Bonds
B. Mutual Fund D. Bank Deposits
2. The following are examples of Alternatives to Fixed Income
and Equities.
B. Mutual Funds & UITF
C. Stocks & Mutual funds
C. Bank Deposits & Stocks
D. Bank Deposits & Cryptocurrencies
3. Which among the following is an advantage of the fixed income and
equities called stocks?
A. Riskiest of all assets that has a possibility of losing more than 50% of
their money in one day.
B. Lower interest income
C. No guaranteed returns
D. Unlimited upside

4. Real estate assets may include the following except for___________

B. Land C. Car
B. House D. Lot

5. Which is true about currencies?

C. Generally Accepted form of money.
B. Includes coins, paper notes.
C. May include USD, PHP, and other.
D. All of the above.
Motivation:
Scenario: Angel is looking forward to invest her
savings as a part time tutor. She planned to deposit her savings
in a bank for it has a higher security and offers 3% interest per
annum. On the other hand, her friend Liza introduced her about
ABC Food Corporation that is selling some of their stocks, giving
high and promising returns but with higher risk due to poor
security and unstable market price. According to Liza, shares of
stocks are sold in a lower price due to the pandemic and once
everything will be back to normal, the price of the stocks will
rise again.
If you are Angel, are you going to deposit
your money in the bank or you are going to purchase shares
of stocks from ABC Food Corporation? Why?
What is Investment?
To invest is to allocate money in the
expectation of some benefit in the future.
• In finance, the benefit from an investment
is called a return. The return may consist of a gain
or loss realized from the sale of a property or an
investment, unrealized capital appreciation (or
depreciation), or investment incomes such as
dividend, interest, rental income or a combination of
capital gain and income.
• The return may also include currency exchange
rates.
Investment is an asset or item
acquired with the goal of generating
income of appreciation.

Appreciation refers to an increase in

the value of an asset over time.
• There are types of investments that investors
are giving focus into.
• If you are planning to go into an investment
you need to consider the risks that you might
encounter during the investing process.
• A very good tolerance of risk is very
important, and this will surely help you in
facing what might happen in your investment
in the future.
 A financial investment is any asset or
instrument purchased with the intention of
selling the said asset for a price higher than
the purchase price at some future point in
time. There are many ways in investing.

 Buying and selling products can be

considered investing. Buying the products in
lower cost and selling them in a higher price.
 Financial investments can be an equity
investment, where you buy stocks from
companies and be part of the company’s
ownership.

 This can also be in a form of loans that is

being purchased and will generate income in
the future.
 Investors look for different ways in investing
their money to generate more income. Even
today, investors are not only using physical
currencies in purchasing assets to gain
profits.
 Many are now using crypto currencies or
digital assets in trading online.
 Investing now is not only done in the physical market
but is now also happening in the digital market. But
trading online or offline still comes with the goal of
investing which is to gain profit.

 In investing, you need to consider the risk return

trade-off. Higher risk is associated with greater
probability of higher return and lower risk with a
greater probability of smaller return. This trade off
which an investor faces between risk and return while
considering investment decisions is called the risk
return trade off
 What are the different types of investments?
Investments can be any form and there are many of its types.
• Stocks,
• bonds,
• investment funds,
• bank products,
• options,
• annuities,
• retirement,
• saving for education,
• alternative and complex products,
• initial coin offerings and cryptocurrencies,
• commodity futures,
• security futures and insurances are some of the various types of
investments. These types of investments do have their own advantages
and disadvantages, and these can be used for investors to compare
each.
 What are the different types of investments?

The types of investments are grouped

into three:
(1)fixed income and equities,
(2) alternatives to fixed income and
equities,
(3) other investment assets.
1. Fixed Income and Equities
Both equity and fixed income products are
financial instruments that can help investors achieve
their financial goals.
• Equity investments generally consist of stocks or
stock funds, while fixed income securities
generally consist of corporate or government
methods. Equity and fixed income products have
their respective risk
 Equity and fixed income products have their
respective risk and-return profiles; investors will
often choose an optimal mix of both asset classes to
achieve the desire risk-and-return combination for
their portfolios.
 The term fixed income-refers to the interest
payments that an investor receives are based on the
solvency of the borrower and current interest rates.
This type of investment offers higher interest based
on how their maturities are.

Equity investment refers to buying shares in a

particular company and, thereafter, holding it in order to
gain ownership interest that can be sold later to generate
reasonable returns depending on its investment objectives.
 Other examples of fixed income investments
are treasury bills, money market instruments,
and asset-backed securities
Owner’s investment in his business,
investment in shares of a public company,
acquisition of stake in another company through
merger, venture capital investment in startup,
and private equity investment in mature
companies are also examples of equity
investments.
 2. Alternative to fixed income and
equities

An alternative investment is a financial

asset that does not fall into one of the
conventional equities, income, or cash
categories. Alternative investments tend to be
somewhat not easily converted to cash or
illiquid.
3. Other Investment Assets
Investment assets are tangible or intangible
items obtained for producing additional
income or held for speculation in anticipation
of a future increase in value. Here are
other investments assets that investors
intended to take:
Investment type:
1. Currencies are the most
generally accepted form of money,
including coins and paper notes,
which is issued by a government
and circulate within an economy.
This includes Peso, Dollars, Euro,
and other currencies that circulate
within the country or around the
world.
Investment type:
2. Crypto currencies on the other hand is a
form of payment that can be exchanged online
for goods and services. Cryptocurrencies work
using a technology called blockchain.
Blockchain is a decentralized technology spread
across many computers that manages and
records transactions. Part of the appeal of this
technology is its security.
Examples of crypto currencies are
Bitcoin, Ethereum, Litecoin. Bitcoin Cash, etc.
wherein these cryptos do have their equivalent
values in different currencies. These can also
be convertible to cash using a technology
application.
Investment type:
3. Commodities are the basic
goods used in commerce that is
interchangeable with other
commodities of the same type.
Three of the most commonly
traded commodities include oil,
gold, and base metals like
nickel.
4. Real estate investing involves the
purchase, ownership, management,
rental and/or sale of real estate for
profit. Improvement of realty property
as part of a real estate investment
strategy is generally considered to be a
sub-specialty of real estate investing
called real estate development.
Real estate is an asset form
with limited liquidity relative to other
investments (such as stocks or bonds
that openly trade on financial markets).
4. Real estate investing

It is also capital intensive (although

capital may be gained through mortgage
leverage) and is highly cash flow
dependent. If these factors are not well
understood and managed by the
investor, real estate becomes a risky
investment. Insurance is a contract or
policy in which an individual or entity
receives financial protection or
reimbursement against losses from an
insurance company, i.e. life insurance,
educational plans, and VULs
5. Insurance policies are used to hedge against
the risk of financial losses, both big and small,
that may result from damage to the insured or
her property, or from liability for damage or
injury caused to a third party.

Policy holders are paying an amount in

regular basis to the insurance company in
return for the insurance/protection provided
and this is called insurance premium. Sun Life
of Canada, Pru Life Insurance Corporation of
UK, Philippines AXA Life Insurance, Corporation,
and BPI-Philam Life Assurance Corporation are
just some of the many Life Insurance
Companies that Filipinos are patronizing.
Some insurance providers like PruLife UK is providing VUL
(Variable Universal Life Insurance) to their clients. This
VUL is a life insurance that offers both death, benefit,
and investment features.
Investments give high opportunities to investors
and give them the highest return possible. On the other
hand, investments bring bad image to business
enthusiasts as some are used for scams and takes
advantage to those who are new in the field. It is very
important for every investor to know their goals, know
their priorities, and be valiant in facing the risks for
higher risk can be an indication of higher returns rather
than with the low ones
UITF
Mutual funds
Crypto currencies
Commodities
Real State
Insurance
Currencies
Stocks

Bank Deposits
Bonds
Task 4 - Application
Direction: Answer the following questions below.
Write your answer in your notebook or in a clean
sheet of paper. Rubric for your answers is provided
below.

1. Why would a risk-taker type of investor prefer

equities over fixed income?
2. For the 10 years in your life, if you are to invest,
where will you put it and why?
Lets Summarize!
Investment is an asset or item acquired with the goal of generating income of
appreciation.
Appreciation refers to an increase in the value of an asset over time.

The types of investments are grouped into three:

1. fixed income 2. alternatives to fixed 3. other investment
income and equities, assets.
and equities

Investment type Investment type Investment type

1. Stocks (Equity) 1. Mutual Funds 1.Currencies

2. Bank Deposits (Fixed 2. Real Estate
Income) 3. Insurance
3. Bonds (Fixed Income) 2. Unit Investment trust 4. Commodities
funds (UITF) 5. Cryptocurrencies /
Digital Currencies
Write TRUE if the statement is correct, otherwise
FALSE.
1.Currencies are powered by blockchain technology.
2. Real Properties are illiquid and difficult to sell.
3. In investing, it is always considered that the higher
the risk the higher the returns.
4. Investing commodities can also give investors high
returns.
5. Currencies are considered as the biggest market in
the world.
Answer
Assignment:
Direction: Write a short explanation about
your understanding of the quote below. Write
your answer in your notebook or in a clean
sheet of paper.

“Wealth is only a benefit of money. If you

win, the money will be there.”