The old line financial instruments I understand are stocks, bonds, and bank deposits. These either grant ownership in a valuable company (stocks) or are backed by promises to pay (bonds) from strong companies (Ford, Facebook, Apple, and many more) or strong governments (USA, Britain, Germany, Japan and others).Bonds issued by dead beats like Greece or Puerto Rico are often bought, but should not be since Greece has no way of paying them off. Most banks understand this but there were a number of brain-dead European banks that bought Greek bonds because the Greeks offered juicy interest rates.
Lately we have crypto currencies like Bitcoin coming on the market. These sold because they have been going up dramatically in value. There is nothing behind crypto currencies except the desire to buy them from other investors. When the other investors stop buying, the crypto currencies sink, badly. Right now the Wall St Journal has been running stories every day or so about how badly the crypto currencies have tanked and how badly investors have been burned.
One of my rules is don’t invest in things that have no value of themselves. Stocks and bonds can be sold in markets that are open 24/7 and cash can be in your checking account within a day or two. You cannot do that with crypto currencies.
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