Two common investments out there are stocks and CDs. Each will give you a return on your money, but they are not equal. Of these two investments only one will help you to grow your money and achieve financial freedom.

First of all, let’s look at what these investments actually are, starting with CDs. A CD is simply an investment that banks offer. Anyone can invest their money into a CD and earn a secured return on their money. This return is normally small, 1-4% annually, however it is safe and that is the trade off.

This is a really safe way to invest and it does normally help you at least keep up with inflation. However, there is a problem with this.

Nobody cares to ask how banks can afford to give you a guaranteed return that seems generous. Well the reason is because they too invest.

Banks will take the money that is invested into them and then turn around and invest it themselves into things like loans and buying fundamentally strong dividend paying stocks. This way they can grow that money faster then the interest they have to pay.

Although these investments do have some risk in them, you cannot invest into the stock market and get a 100% guarenteed return off of your investment. However they have so much potential that paying out a 1-4% interest for the opportunity to invest into them is almost nothing.

Some investors have decided not to invest into things such as CDs and instead fo strait to the meat that comes from things such as the stock market which has the potential to give them a much higher return.

A stock is simply part of a company. When you buy a stock you are just investing into the company that you bought the stock in. So if you do your research and invest into powerful stocks then it can lead to a large return.

So, does that mean that you should stop investing into safer assets like CDs and go right to the meat an bones that come from riskier investments with a higher growth potential? Well that depends on what your goals are and how much of an investor you want to be. If you want to study the market and invest for years then stocks can be very powerful.

Now, on the other hand if you do not want to take the time to learn to invest or if you just want to have a safety net that you know will be there, then investing into something safe with a smaller return will help you get there easier.

For some stock market investing tips and more information on the stock market visit Shaun’s site about the stock market basics