Now if we examine investments starting at zero and moving to 100, we have several types. Near the zero point we would have savings accounts and CDs. The problem here is that with interest rates near zero, the return on this type of investment is near zilch.

Moving along our risk line we come to bonds. A bond is a loan. Again keeping near zero, the safest bonds are US government bonds. Here again, the return is small. Many investors look to corporate or municipal bonds for higher yields. The problem here is that they are rated from AAA to junk, with junk paying the highest interest rates. The degree of risk is dependent on the perceived ability of the corporation or municipal entity to pay back the bond at face value. The most striking example of what can happen is the Greek crisis. Investors either sold bonds or bid the price down to the point where bondholders now will receive only 50% of the face value.

Stocks are probably the most common type of investment. Here again, we have a risk continuum. First we have two major types of stocks, common and preferred. Preferred stocks usually pay a higher dividend and will be paid first in case of a default of the company. Now, we can move from “blue chip” stocks, those of our major international corporations, to the very end of the continuum to penny stocks. Here we are at 100. Most of these stocks are start- ups that just don’t make it. Penny stocks are like the movie “Rocky. Once and a while, against all odds, a few penny stocks will make it to the Big Board.

Within the stock category we have a variety of choices. Some may have access to 401k plans. The money is usually invested in mutual funds. Another variation is the IRA and Roth IRA. Both of these have a tax- deferred advantage. In recent years, newer variations of stock investments have become popular. Included are Index stocks such as SPYs, ETFs, and hedge funds. Hedge funds are different from mutual funds in that they can trade either long or short. Most mutual funds trade the long side only.

Precious metals such as gold are another kind of investment. Again you can run the continuum from coin collection to buying physical gold, to buying gold stocks, to buying gold ETFs. At 100 on the risk scale, you can buy gold futures and options.

Real estate, not including your home, is another solid form of investment. Many fortunes have been made buying apartment buildings, shopping centers and other forms of commercial property. If you have a mortgage you can deduct the interest. You can depreciate your property, which means that you can take a yearly tax deduction. You can deduct expenses, and capital improvements. You’ve heard this axiom many times but it is worth repeating. When it comes to real estate the key is location, location, location. If you have an eye for the right location and the right property within that location, then buy it.

Certain locations, while less desirable, may be eligible for a variety to federal and state grants to recondition the property. Here again, if you have the foresight to visualize what can be done with this kind of property, it may offer high returns. These choices should keep your mind busy. Just be sure that you take the time to research whatever type of investment you choose.