First, I want to start off by saying investing is something that you need to do in order to become a wealth builder. Not only that, but if you want to achieve financial independence you must have income that’s being generated from some sort of investment. So, it’s imperative to your financial goals that you find an investment that you’re comfortable with and that will generate the income you need to reach your goals. Investing can sound complicated and sometimes intimidating too. If you’re new to investing and you want a hands off approach I would suggest talking to someone in your community, such as your local financial planner, about the different investing options for you. If there isn’t a local financial professional that can help you then you can turn to the internet. There is what seems like an endless amount of information on the internet that can help you better understand your investing options. You can find different companies that offer investing accounts online and investing professionals who you can call and talk to. I highly recommend doing your research before jumping into any investment. Make sure that you understand the level of risk associated with your investment and remember that it’s ok to start small.

So, let’s take a quick look at a few investments that are out there. One of the most common types of investments that are available are mutual funds. Well, what exactly is a mutual fund? According to Investopidia.com the definition of a mutual fund is, “an investment vehicle made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets.” Essentially, different investors pool their money into a fund that seeks to perform a certain investment objective. There are lots of companies that offer mutual funds such as Vanguard, T. Rowe Price, and Fidelity among many, many more. Different mutual funds invest into different things. For example, a mutual fund’s goal might be to mimic the performance of the S&P 500 so it will be invested in stock of those companies that make up the S&P 500. According to statista.com there were nearly 80,000 mutual funds worldwide in 2015. The great thing about mutual funds is that they can offer diversification in a very affordable and convenient way. Some of the more diversified mutual funds could be considered “balanced”. This is where they invest in both stocks and bonds. The nice thing about having a balanced mutual fund is that it is diversified meaning it will not be highly affected if there is significant movement in one sector of the market. There are also mutual funds that only invest into stocks, other mutual funds that only invest in bonds, and some mutual funds invest in different sectors of the market. These funds tend to have less diversification than balanced funds but the good thing about these mutual funds is that they can have upside exposure to the market sector that they are concentrated in. For example, a mutual fund can be made up of sever tech stocks which would expose the mutual fund to the tech industry. Or you can have a mutual fund that can be made up of several health care stocks which would expose that mutual fund to the health care industry.

Another investment that is similar to a mutual fund is an ETF (exchange-traded fund). I kind of like to think of an ETF as being half like a mutual fund and half like a stock. The Vanguard Group defines an ETF as “A type of investment with characteristics of both mutual funds and individual...