The wealthy know how to invest their money to make even more money.  They understand their assets and when to invest to make the most return on their money.  It takes money to make money but you can start slowly and pick up speed as you go along.  The first thing to understand is what investments are.

Investments or assets fall into five main categories.  Everyone has a portfolio that includes some, if not all, of these assets.  A good portfolio has a mix of at least several investments so that no single investment carries all their money.  Each type of investment offers a return on your money.  Generally, the higher the possible return, the riskier the investment is. 

Cash - The most liquid of assets. Cash can be kept in a savings account at a bank or savings and loan.  The savings account gets low interest, generally between 2% to 4%.  The money is completely safe and can be taken out at any time, making it a short-term investment.  It is important to have some money available that can be easily obtained in the event of an emergency.  Never tie up all your cash in long-term investments.

Bonds - Typically issued by the government or a building society.  They have interest rates that are higher than savings accounts and offer a specific fixed yearly return until they reach maturity.  These are considered a safe long-term investment.  Once bonds reach their maximum or face value they should be cashed in because they no longer accrue any more interest.  The money can then be placed into the purchase of new bonds or into other investments.  You should invest in several bonds that mature at different times.

Property or real estate - An important investment that most wealthy people make.  Not only does the investment offer good return it also has substantial tax benefits that are necessary for wealthy people to have.  Property can be residential or commercial; each one offers monthly income as well as investment.  The real estate market fluctuates quite rapidly and so caution should be used when making property investments. 

Equities - Shares in companies, also called stocks.  Equities are considered long-term investments and the overall return can vary greatly.  Learning when to buy and when to sell to make money is an art that few master.  Equities are risky but can also offer a possible return like no other.  For those who don’t follow the markets you may need to enlist the help of a financial advisor.  They have experience in understanding market trends and can help you make financial decisions.  There are some stocks that are safer than others.   

Commodities - Investments in specific goods such as oil, coffee or gold.  They tend to offer good returns however they can be very unpredictable.  Some commodities go through long periods where not much happens and suddenly resurgence can make them become quite active.  Commodities investments take some knowledge and experience and are not typically for the beginning investor.

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