Types of Financial Instruments Available in the American Market

The financial instruments available in the American market are very diverse, providing investors with a wide range of options to achieve their financial goals. Here is an overview of the most important of these instruments that we present to you in today’s article.

Types of Financial Instruments Available in the American Market

In the following lines, we explain in detail the Types of Financial Instruments Available in the American Market:

1. Securities:

• Stocks: represent partial ownership in a company. Investors can make profits through the increase in the value of the stock and the distribution of dividends.
• Bonds: are loans provided by governments or companies to investors, with a promise to pay periodic interest and recover the principal amount when the bond matures.
• Mutual funds: collect money from many investors and invest it in a variety of assets (stocks, bonds, real estate, etc.).

2. Financial derivatives:

• Futures: an agreement between two parties to buy or sell a financial asset at a specific price at a specific future date.
• Options contracts: give the buyer the right (but not the obligation) to buy or sell a financial asset at a specific price during a specific period of time.
• Contracts for Difference (CFD): Allows investors to speculate on the price movements of assets without having to own the assets themselves.

3. Other Assets:

• Real Estate: Includes investments in residential and commercial properties and land.
• Commodities: Such as gold, oil and agricultural crops, can be traded as investment assets.
• Cryptocurrencies: Digital assets that use encryption to protect transactions.

4. Credit Products:

• Bank Deposits: A safe way to save money and earn a simple return.
• Certificates of Deposit: Savings products that offer higher returns than regular deposits for a specified period of time.

Factors Influencing the Choice of Financial Instruments

• Investment Objectives: Are you looking for short-term or long-term profits? Are you looking for fixed income or growth?
• Risk Tolerance: Your ability to withstand market volatility.
• Investment Time Horizon: The period for which you intend to invest.
• Financial Knowledge: Your level of understanding of the financial markets and the available instruments.