Funds, shares, bonds and ETFs
You can invest in a wide range of financial products. These are divided into asset classes and differ in terms of their nature and type of risk. Buying shares, for example, means you hold an equity stake in a company. Watch our explanatory video entitled “What is a share?” to find out more about it. Investing in bonds means you hold fixed-interest securities – so that you as an investor receive a pre-defined coupon on a regular basis. You can read more about bonds in the article “Bonds – What are they?”.
Whereas bonds are seen as a lower-risk investment, share prices can fluctuate significantly which essentially means they are higher risk – you generally have a greater opportunity to achieve gains with shares than with bonds. Funds and ETFs (funds traded on the stock exchange) are one of the most popular asset classes as they combine various investments (such as shares or bonds) in different companies, markets or themes, spreading the risk of individual investments. There’s more on that under the next point. Read more about funds in the article “Which different types of funds are available?”
As well as funds, ETFs, shares and bonds, investors can invest in a variety of different products such as options, structured products or commodities. Newcomers to investment are well advised to firstly familiarize themselves with the main asset classes.