Investments such as stocks, bonds, and mutual funds can help you reach your financial goals. A rule of thumb is that you should invest between 5-10% of your income into investments. To reach this point, reduce debt and free up extra money.
Stock investments. Stocks represent ownership in a company. When you invest in stocks, you are buying shares of a company. Stocks earn income for owners in two ways: 1) dividends (payouts to shareholders), and 2) rise in stock price. Historically, stocks have returned about 10% per year.
Bond investments. Bonds are debt issued by a company to raise capital. When you buy bonds, you are paid back the investment amount plus interest. The interest rate depends on many factors. Historically, investments in bonds return a lower interest rate in stocks, but can be considered 'safer' (although nothing is guaranteed!).
Mutual fund investments. Mutual funds are a pool of money run by fund managers. They are often invested in a diverse number of companies and are generally considered less risky than purchasing individual stocks in a company.
Real estate investments. These investments are done in two ways: residential and rentals. Most people who have owned their homes for awhile have equity in the home. When the house is sold, they make money on it. Another investment is rentals -- purchase a building and let the rentors pay for the mortgage.
Again, until you reduce debt, pay off credit cards and loans, you won't have the money left over to begin investing. Credit card interest generally averages higher than the historical return on stocks...so a wise investment is to start reducing credit card debt today!
Education is an investment that is often not considered. Investing in an education costs money (to pay for tuition) that will pay off when you get a job earning more than you would have without the education.
Remember: do due diligence and understand what your investment goal is before spending any money.