Demystifying the investment world: Stocks, Shares, ETFs, and MMFs eplained

Investing can feel overwhelming, especially if you’re new to it. With so many acronyms and technical jargon, it's easy to feel lost. At nsave, we’re here to simplify your financial journey. In this blog, we’ll discuss the types of investments accessible on the nsave app. By the end, you’ll have a better understanding of how these elements can play a role in growing your wealth.
At nsave, we offer access to a wide range of investment assets with varying levels of risk, allowing you to choose options that align with your financial goals and comfort level. Whether you're a beginner taking your first steps into the investment world or an experienced investor with a well-crafted strategy, our platform is designed to meet your needs.
Which investments are best for me?
Different investments have different risks. Generally, the riskier the investment, the greater the potential profit—but also the potential for loss. It's important to choose investments based on what you're willing and able to risk. Here's a breakdown of the investment options available through the nsave app:
- Money Market Funds (MMFs): Normally known as one of the safer investment types, MMFs offer lower returns but come with lower risk, making them a steadier option. At nsave, you can access MMFs via high-yield ETFs, allowing you to prioritise the safety and liquidity of your investments1.
- Exchange-Traded Funds (ETFs): Think of ETFs as baskets filled with a variety of stocks or bonds2. They offer a simple way to invest in a diversified portfolio without having to buy each asset individually. Because they include investments from multiple companies, their overall performance is balanced across all of them. If one company in the fund performs poorly, strong performance from another can help offset the loss. This diversification spreads out the risk. For example, an ETF might track the performance of the S&P 500, a collection of 500 of the largest publicly traded companies in the U.S. By investing in this ETF, you’re effectively investing in all 500 companies at once, spreading out your risk.
- Individual company shares: Investing in individual company shares allows you to directly support and benefit from companies you believe in. This approach offers the potential for significant returns as you capitalise on a company's growth and success. It also empowers you to apply your unique investment strategies and focus on industries or businesses you're passionate about. With thoughtful research and selection, investing in individual stocks can be both rewarding and impactful. However, investing in individual stocks is typically associated with higher risks; if the company faces hard times, the value of your shares can drop significantly.
- Commodities, like gold and silver: Commodities can swing in value based on global demand and economic conditions. They can act as a safety net during times when other investments aren't performing well, serving as a hedge against market volatility. They can act as a safety net during times when other investments aren't doing well, but they're also subject to their own risks. You can invest in commodities, such as gold and silver, by investing in commodity-focused ETFs via the nsave app.
This is where diversification comes into play3. Think of it as not putting all your eggs in one basket. By spreading your money across different types of investments—like ETFs, MMFs, shares, and commodities—you reduce the chance that a poor performance in one area will drastically affect your overall investment. Diversification is often used as a way to help balance risk and can lead to more stable returns over time. Learn more about the risks associated with investing in this article.
How can these investment options work for you?
Each of these investment tools serves a unique purpose:
- Stocks and Shares: Offer higher potential returns and the opportunity to tailor your investments to companies you are passionate about. Learn more about the risks involved here.
- ETFs: Provide an easy way to diversify your investments.
- MMFs: Offer a safe, stable place for your money with lower risk.
At nsave, we're here to empower you to make informed financial decisions. Whether you're saving for the future, protecting your wealth from inflation, or exploring new investment opportunities, understanding these basic concepts is a great place to start.
Ready to start investing?
Our platform offers a seamless way to manage your finances, from protecting your savings to growing your wealth through investments. Start your journey today with nsave and take control of your financial future.
Let’s demystify finance, one step at a time.
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This article is for informational purposes only and does not constitute financial advice. Investments involve risks, including the potential loss of capital. Past performance is not indicative of future results. Each investor is responsible for making their own decisions and should seek advice from a licensed financial advisor or qualified professional if uncertain.