Choose investments with characteristics that match your needs and desires:

Safety of principal (amount you put in to invest)

Liquidity and collateral value (amount you can borrow against)

Income generated now and at retirement

Growth favored (deferral or relief)

Freedom from management attention

Choose investments to reflect your risk tolerance. Assess you ability to handle a decline (or drop in value) of a 5 percent, 15 percent, or 25 percent loss in one year. Depending on your life stage, assess whether you need current income or long-term growth.

Strategies

• Have some liquid assets that can be quickly converted to cash without loss of principal (checking account, savings account, money market).
  
  
• Have some that are non-liquid such as real estate and art so that you are not tempted to take it out and spend it.
  
  
• Have some with marketability, which is the ability of the asset to be readily purchased or sold such as stocks (securities sold and bought in the NYSE, NASDAQ, AMEX and other markets both domestically and globally) and bonds (issued by corporations, municipalities, government that have par values and coupons paying interest semiannually). Less marketable are Indian war clubs of the 18th century and precious stones, for example:

• Have a return now or when the asset (equity) grows in value and can be sold. Total Return is one measure of investment performance. It is determined by adding the change in price (gain or loss) and the income (either interest or dividends)
  
  
• Compare returns on types of investments and on financial institutions. The Credit Union National Association (CUNA) President reported in 1999 "Simply by shifting funds from a bank to an equivalent account at a credit union, consumers could earn billions of dollars more in annual interest" (Consumer Federation of America)

• Know types of assets, which are cash and equivalents (bank accounts and CDs), fixed income (bonds and mortgages), equity (common and preferred stock), commodities (Grains and Oilseeds, Metals and Petroleum, Wood, Hybrids, stock options, convertible securities, index options, commodity futures contracts, derivatives), and Mutual funds -- an open-end investment company