It's important to diversify your wealth across multiple investment vehicles and asset classes, because each can come with their own set of risks and rewards. Diversification can help reduce your portfolio's risk so that one asset or asset class's performance doesn't affect your entire portfolio.
These highlights are generalizations and may vary upon individual offerings.
Pros: Typically have some small tax incentives and can often have employer contributions.
Cons: Most of these have early withdrawal penalties, annual contribution limits, and income restrictions.
Tip: If you want more control over where your current 401k/IRA are being invested, look into switching your account to one that is "self directed" which allows you to invest those funds into an asset of your choosing in order to retain a higher return.
Pros: For the most part, options are lower risk, low minimum investment, with a fixed interest rate.
Cons: Bonds and CDs typically offer lower yields, sometimes even below inflation.
Pros: These vehicles generally offer more control over what's being purchased along with higher returns.
Cons: Ownership investments are often more volatile and will demand more research upfront prior to investing.
Pros: Pooled investments group funds together to create economies of scale while leveraging professional management, typically in the stock market and real estate.
Cons: Some of these vehicles can be associated with higher fees and commissions.
