Types of investments compared

The word 'investments' covers very different things. This page puts the main types side by side so you can see what each one pays, what can go wrong, and how it is taxed. IncomeGrid helps you discover higher-yield income opportunities you may not have looked at, so you can earn more on the same money. It has 40,000+ investment options screened, each with its yield, after-tax yield and a risk level from 1 to 5.

The main investment types

Type	How it pays	Main risk	How the income is taxed (US)
Savings / CDs	Interest	Low; FDIC insured up to the limit	Federal and state
Treasury bills, notes, bonds	Interest	Interest-rate risk if sold early	Federal only, no state tax
Municipal bonds	Interest	Issuer credit	Often no federal tax; sometimes no state tax in your state
Company bonds	Interest	Issuer credit, rates	Federal and state
Money-market funds	Dividends from interest	Low, not FDIC insured	Depends on what the fund holds
Stocks	Dividends, price growth	Price swings	Qualified dividends at lower rates
REITs	Distributions	Property market, rates	Mostly ordinary income
Bond / stock funds and ETFs	Distributions	Whatever the fund holds	Pass-through of the underlying

Investment vs investments vs investment products

In everyday use 'investment' is the act or the single holding, 'investments' are what you own, and regulators often say 'investment products' for packaged items such as funds and annuities. Investor.gov has a glossary for each product type and the questions to ask before buying.

Where higher yields come from

A higher yield is payment for something: a longer term, a weaker borrower, less liquidity, or a more complex structure. Looking across all types – not only the ones your bank offers – is how people find opportunities to earn more for the same level of risk. IncomeGrid ranks every item by yield after tax for where you live: after federal, state and each investment type tax (Treasuries, municipal bonds, corporate bonds, funds, REITs and filed offerings are each taxed differently).

Liquidity: how fast you can get your money

Deposits and money-market funds can usually be withdrawn quickly. Listed stocks, bonds and ETFs can be sold on trading days at the market price. Some filed offerings, interval funds and non-traded REITs limit withdrawals. Match the type to when you'll need the money – see where to invest money.

Matching types to goals

Short-term money (an emergency fund, a down payment) belongs in types with low price risk and quick access: insured deposits, Treasury bills and government money-market funds. Medium-term money suits Treasury notes, CDs and high-grade bonds whose maturities line up with the date you need it. Long-term money can take more price risk in stocks and real estate in exchange for growth. Income needs can be met by combining bonds, dividend payers and REITs. The point of comparing types is not to find one winner but to give each pot of money a type that suits its job – and within each type, to pick the option that pays more after tax.

How IncomeGrid helps you earn more

IncomeGrid helps you discover higher-yield income opportunities you may not have looked at, so you can earn more on the same money. It has 40,000+ investment options screened, each with its yield, after-tax yield and a risk level from 1 to 5. Choose where you live and every yield is shown after federal, state and each investment type tax, so you can see which options pay you more.

Compare every type after tax → or browse example income portfolios

Frequently asked questions

What are the four main types of investments?

A common grouping is cash and cash equivalents, bonds (fixed income), stocks (equities), and real assets such as property. Funds hold one or more of these.

Which investment type pays the most income?

Higher-yield types such as high-yield bonds, REITs and some filed offerings usually pay more, with more risk. Compare after tax and by risk level.

Are ETFs a type of investment?

An ETF is a wrapper: a fund that trades on an exchange and holds stocks, bonds or other assets.

Not investment advice. General information only; yields change, check the source before acting.