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Introduction to the Universe of Investing

Investing can feel overwhelming when you’re just getting started. There are so many products and strategies to build wealth, each with distinct risks, returns, and strategies.

 

Yet the core goal of investing is simple: grow your money over time while keeping risk at a level you can live with.  In this guide, we walk through common investment options, along with how you can begin exploring each type.

Jump to:

Cash
Treasuries
Bonds
Stock Market ETFs

Cash

​This is your starting point. This is money you already have in your checking or savings account–money that’s safe, easy to access, and ready to use when you need it.

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Instead of letting your cash sit in a regular checking account (which usually earns 0% interest), you can put it to work in something called cash investments.

 

Cash investments are very low-risk ways to grow your money over time. These include:

 

  • Savings Accounts – Especially high-yield ones that pay more interest than regular savings.

  • Money Market Accounts – A type of savings account that may offer better rates and check-writing ability.

  • Certificates of Deposit (CDs) – You agree to lock your money away for a certain amount of time (like 6 months or a year) in exchange for a slightly higher return.

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Pros

  • Safety – Your money is insured by the government (up to $250,000 per bank through FDIC).

  • Liquidity (easy to access) – With savings and money market accounts, you can withdraw your money anytime.

  • Good for short-term goals – Like building an emergency fund, saving for a trip, or preparing for a big purchase.

 

Cons

  • Low returns – Most of the time, cash investments only earn about 1–5% per year.

  • May not keep up with inflation – If inflation is 3% and you’re earning 2%, you’re actually losing buying power.

  • Not great for long-term growth – If you’re saving for retirement or building wealth, you’ll likely need higher-return investments like stocks or real estate.

 

Cash investments are a smart, safe way to park your money—especially for short-term needs or emergencies. While the returns are modest, the risk is almost zero. Just don’t expect to build wealth with cash alone. It’s your foundation, not the whole house.

 

  • How to Start

    • Open a high-yield savings account online or at your local bank. Many online banks like Ally, Marcus, or Capital One offer good interest rates. 

    • If you want a slightly higher return and don’t need the cash right away, look into CDs or a money market fund.

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  • Examples

    • Ally High-Yield Savings Account – Easy to use, no fees, and higher-than-average interest.

    • Vanguard VMFXX Money Market Fund – A cash-like investment you can buy through a brokerage account.

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  • Typical Returns

    • High-Yield Savings Account: ~4% (as of 2025)

    • Money Market Fund: ~4–5%

    • CDs: ~3–5%, depending on the term

    • Returns can vary depending on interest rates set by the Federal Reserve (see below).

Treasuries
U.S. Treasuries are some of the safest investments in the world. Essentially, Treasuries are just loans to the U.S. Federal government, where you give the government money and the government pays you back over time, with interest.

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Treasuries offer predictable, low returns. All other investment options are usually compared to the returns you can get from Treasuries. The Treasury is unique because it also controls the U.S. money supply, if they ever need more money to pay back a loan, they can just print more money. The Treasury has never missed a loan repayment in over 200 years. That’s why Treasuries are often called “risk-free” when compared to other investments.

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The U.S. Federal Reserve (the Fed) plays a big role here too. The Fed is a group of people that meet regularly and vote to decide the interest rate, which heavily influences how much interest Treasuries pay. When the Fed raises or lowers rates, new Treasuries offer higher or lower returns, which can ripple across the global economy by raising borrowing costs and changing investor behavior around the world.

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There are a few different types of Treasuries:

 

  • Treasury Bills (T-Bills) – Short-term loans, typically 1 year or less.

  • Treasury Notes (T-Notes) – Medium-term loans, usually 2 to 10 years.

  • Treasury Bonds (T-Bonds) – Long-term loans, up to 30 years.

  • TIPS (Treasury Inflation-Protected Securities) – Special Treasuries that adjust with inflation to protect your purchasing power.

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Each one pays you interest either at regular intervals or when it matures, depending on the type.

 

Pros

  • Very Safe – You’re loaning money to the U.S. government, which has an excellent track record of repayment.

  • Predictable Returns – You know upfront how much interest you’ll earn.

  • Easy to Buy – You can get them directly online or through most investment accounts.

  • Useful for All Ages – Whether you’re saving for retirement or just want a safe place to park cash, Treasuries are a good option.

  • Tax Advantage – Interest from Treasuries is exempt from state and local income tax (though not federal).

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Cons

  • Low Returns – You’re trading safety for lower earnings. Returns are usually between 2–5% per year.

  • Not Great for Beating Inflation – If inflation is high and your Treasury only earns 2%, you’re actually losing purchasing power.

  • Long-Term Options Lock Up Your Money – If you buy a 10- or 30-year Treasury, your money is tied up unless you sell early (which can result in a loss if rates go up).

  • Interest Rate Risk – When interest rates rise, the market value of older Treasuries can fall if you need to sell early.

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U.S. Treasuries are a great option for people who want safety, stability, and simplicity. They’re not flashy, but they do their job—especially if you’re looking to protect your money or earn a little interest without taking big risks. They can also act as a solid foundation in your portfolio—something to balance out riskier investments like stocks or real estate.

 

  • How to Start

    • Open an account at TreasuryDirect.gov and buy treasuries directly from the government or

    • Open a brokerage account (e.g., Vanguard, Fidelity, or Schwab) and buy Treasuries or Treasury ETFs (Exchange-Traded Funds)

    • Treasury ETFs bundle many Treasuries into one product and trade easily like stocks

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  • Examples

    • SHV – iShares Short Treasury Bond ETF (ultra-short term, very stable)

    • SHY – iShares 1-3 Year Treasury ETF (short-term, low volatility)

    • TLT – iShares 20+ Year Treasury ETF or VGLT – Vanguard Long-Term Treasury ETF (long-term, more interest but more ups and downs)

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  • Typical Returns

    • 2% to 5% annually, depending on the term and current interest rates.

    • Short-term Treasuries tend to pay less, long-term ones usually pay more (but come with more risk if sold early).

Bonds
Essentially, bonds are also just loans that you give to someone else, usually a government or a company. You give them money, and they promise to pay you interest over time, and give you your original money back at the end of the loan.

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There are two main groups that you can loan money to:

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  • Governments – These can be big national governments (like the U.S., UK, or Germany) or smaller ones (like states, cities, or counties).

    • Emerging Markets – bonds from developing countries or less stable economies. They often pay higher interest but come with more risk.

    • Sovereign Bonds - bonds from national governments.

    • Municipal Bonds - bonds from state and local governments.

  • Companies – known as corporate bonds, these are loans to private businesses.

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Bonds are generally seen as safer than stocks, but not all bonds are created equal. Bonds vary in their risk and return based on the confidence the market has that the entity receiving the loan will pay it back.

 

  • A loan to a rich, stable country (like the U.S. or Germany) is very low risk, but pays lower interest.

  • A loan to a smaller or less stable country (like Argentina or Turkey) is riskier, so it pays a higher interest rate to compensate for that risk.

  • A loan to a well-established company like Apple is safer than a loan to a struggling or smaller company.

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Most people don’t buy individual bonds—they invest in bond funds or bond ETFs, which are collections of many different bonds pooled together. This means your money is spread across dozens or even hundreds of loans. If one bond fails (i.e., a company doesn’t pay back its loan), it won’t wreck your entire investment. This is called diversification, which is a very important concept in investing. 

 

Pros

  • Steady Income – Most bonds pay interest regularly, often every 6 months.

  • Lower Risk Than Stocks – Especially government or high-grade corporate bonds.

  • Diversification – Bonds often behave differently than stocks, so they help balance your portfolio.

  • Predictable Returns – You often know upfront what your return will be.

  • Good for Older Investors – As people approach retirement, they often shift more money into bonds for safety.

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Cons

  • Lower Returns – Bonds usually don’t grow your money as fast as stocks.

  • Interest Rate Risk – If interest rates go up, the value of your bond may go down (because newer bonds pay more).

  • Inflation Risk – If inflation is higher than your bond’s return, you’re losing purchasing power.

  • Credit Risk – There’s still a chance a company or government could default and not pay back.

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Bonds are a great tool for generating steady income and balancing your investment portfolio. They’re not flashy, but they’re reliable—like the steady paycheck of the investing world.

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  • How to Start

    • Open a brokerage account (e.g., Vanguard, Fidelity, or Schwab) and buy individual bonds or bond ETFs.

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  • Examples

    • BND – Vanguard Total Bond Market ETF (a mix of U.S. government and corporate bonds).

    • LQD – iShares iBoxx $ Investment Grade Corporate Bond ETF.

    • MUB – iShares National Muni Bond ETF (for tax-free municipal bonds).

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  • Typical Returns 

    • Government Bonds: ~2–4% annually

    • Corporate Bonds: ~3–6%

    • Municipal Bonds: ~3–5% (and often tax-free)

    • High-Yield (Junk) Bonds: 6% or more (but with higher risk)

Stock Market Exchange Traded Funds (ETFs)
When you invest in the stock market, you’re buying shares (or small pieces) of publicly traded companies. If the companies grow and do well, their stock price usually goes up—and your investment becomes more valuable. If they perform poorly, the stock price goes down, and you could lose money.

 

You can make money in two main ways:

  • Capital Gains – When you sell a stock at a price higher than you bought it.

  • Dividends – Some companies share part of their profits by paying cash to shareholders.

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Buying individual stocks means you’re picking specific companies—like Apple, Tesla, or Netflix—hoping their stock prices will go up.

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There are some challenges to buying individual stocks:

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  • High Risk – If the company performs badly, you can lose a lot (even everything). Companies can fail and have their stock price go to zero.

  • Hard to Predict – Even big-name companies’ stock price movements can surprise you.

  • Time-Consuming – You have to research each company, track earnings, monitor the market, and make frequent decisions.

  • Lack of Diversification – If your money is tied up in just one or two stocks, a single bad event can really hurt your portfolio.

 

Instead of picking individual stocks, a stock ETF (Exchange-Traded Fund) lets you invest in hundreds or thousands of companies at once—all with one simple purchase.

 

An ETF is a just basket of stocks grouped together. When you buy one share of an ETF, you’re buying a small slice of all the companies in that basket. For example, the ETF VOO tracks the S&P 500 Index, so when you buy it, you’re investing in 500 of the biggest U.S. companies all at once. ETFs trade on the stock market just like a regular stock. That means you can buy or sell them at any time during the day.

 

While you can buy and sell your ETF at any time, usually the best strategy for most people is buy and hold, where you buy the ETF and plan to keep it over a long time, years or even decades. 

 

Pros

  • Diversification – You’re not betting on a single company. One investment gives you access to hundreds or thousands of stocks, which spreads out your risk.

  • Low Cost – Index funds and ETFs usually have very low fees compared to actively managed funds. That means more of your money stays invested.

  • Easy to Use – You don’t have to pick individual stocks or time the market. You just buy the fund and hold it for the long run.

  • Good Long-Term Returns – Historically, U.S. stock market index funds have returned around 7–10% per year over long time periods (after inflation).

  • Liquidity – ETFs are easy to buy and sell, just like any stock.

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Cons

  • Market Risk – Index funds go up and down with the market. If the market crashes, your investment will likely drop too.

  • No Big Wins – You won’t get rich overnight. Index funds grow steadily over time but aren’t designed for fast gains.

  • Limited Control – You don’t get to pick which stocks are included. You’re investing in the whole index, for better or worse.

 

Stock Market ETFs are one of the most popular—and beginner-friendly—ways to invest in the stock market. They’re simple, affordable, and give you exposure to a large number of companies with a single purchase. You don’t have to be an expert stock picker to succeed—just be patient, consistent, and think long-term.

 

  • How to Start

    • Open a brokerage account (e.g., Vanguard, Fidelity, or Schwab) and buy stock ETFs.

 

  • Examples

    • VOO – Vanguard S&P 500 ETF (tracks the top 500 U.S. companies).

    • VTI – Vanguard Total Stock Market ETF (covers nearly the entire U.S. stock market).

    • Others: SPY (S&P 500), SCHB (Schwab Total Market), ITOT (iShares Total Market).

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  • Typical Returns 

    • Over the last several decades, the U.S. stock market has averaged about 7–10% per year, after inflation.

    • Some years it may go down (even sharply), but over long periods, it has historically grown in value.

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