Types of investment

What you need to know about the different types of investment 

There are many different types of investment, ranging from traditional options like shares, bonds, property and investment funds to higher‑risk alternatives such as structured products, crowdfunding, crypto, contracts for difference (CFDs) and binary options.

Each investment type has its own level of risk, return potential, access to your money and protections if things go wrong. Some investments aim for long‑term growth, while others involve locking your money away or taking on the risk of losing some or all of your investment. Before investing, it’s important to understand how each option works, whether it is regulated by the Central Bank of Ireland, what protections apply and whether it matches your goals, time horizon and attitude to risk. Always seek independent financial advice before you invest. 

What are the main types of investment?

If you are considering investing, think about getting independent financial advice. Our guide to investing can help you if you are unsure where to start. Investments can be grouped into traditional and alternative types. Here are some of the most common:

Traditional investment types

• Shares
• Government and corporate bonds
• Tracker bonds
• Property
• Unit-linked funds

Alternative investment types

• Structured Products
• Crowdfunding
• Crypto
• Binary options
• Contracts for Difference (CFDs)

Shares - what are shares and how do they work?

A share is a small ownership stake in a company that you can buy at a set price. Share prices can rise or fall depending on how the company performs, how investors feel about the market and expectations about future profits. When you buy shares, you become a shareholder in that company.

You can own shares in two ways:

• Directly, by buying them yourself and becoming a shareholder
• Indirectly, through a collective investment fund. In this case, your money is pooled with other investors and often spread across different assets, such as cash, property or bonds

Pros:

• Potential for good returns over the medium to long term
• Some shares pay dividends, providing extra income
• You can manage risk by investing in different sectors or countries

Cons:

• Stock prices can rise and fall dramatically
• No guaranteed return
• Holding shares in one company is high risk so better to spread your investments

How do you earn money from shares?

The idea of buying shares is to keep them for a while in order to make money. The two main ways of earning money through shares is:

• If the company grows and becomes more valuable, the share is worth more – so your investment is worth more too.
• Some shares pay you part of the company’s profits each year. This is called a dividend.

Unsolicited offer for your shares? Be cautious

Always think carefully before buying or selling shares. This is especially important if someone contacts you unexpectedly. Before dealing with any investment firm, check if it's regulated by the Central Bank of Ireland. You should also review the Central Bank’s latest warnings about unauthorised firms.

How and where do you invest in shares?

By yourself

If you want to buy and sell shares by yourself, you can invest through:

• A stockbroker in an investment firm
• An investment broker
• A financial adviser
• A bank
• Online trading apps

Through a collective investment fund

If you want to invest in shares through a collective investment fund where your money is pooled with other people, you can invest through:

• A collective fund manager
• A stockbroker
• An investment broker
• A financial adviser
• A bank

Is investing in shares right for you?

Questions to ask your adviser and things to consider before investing in shares.

If you invest in shares, is your money protected?

Shares are covered under the Investment Compensation Scheme (ICS) up to a maximum of €20,000. The ICS only pays compensation in specific circumstances, and you are not guaranteed to get compensation for all losses. For more information on eligibility criteria visit their website.

Government and corporate bonds

What should you consider before investing in bonds?

When you buy a bond, you are lending money to the issuer of the bond (which is usually a government or a company), and in return, the issuer will agree to pay you back the loan, with interest, (also known as the coupon) at an agreed date in the future.

Once you have been issued with a bond you can buy and sell it on the stock market.

Bonds issued by the Irish government are called treasury bonds. Bonds issued by companies are called corporate bonds. Bonds issued by the UK government are called Gilts.

You can buy bonds in two ways:

1. By buying an individual bond issued by a government or company or
2. Through a collective investment fund where your money is pooled with other people’s and invested in a wide spread of different bonds.

Pros:

• Regular income and possible capital growth
• Easy access to funds for government bonds
• Lower risk, especially with government bonds

Cons:

• Returns can be affected by interest rate changes
• High minimum investment may be needed
• Inflation can reduce your returns if the bond is not index-linked

How do you earn money from investing in bonds?

You can earn money from bonds in two ways:

1. The issuer of the bond will pay you a rate of interest (known as the coupon). This is usually paid every year.
2. The issuer of the bond will also repay you the face value of the bond at an agreed date in the future. Depending on the type of bond bought the value guaranteed may be less than 100%. (Go to tracker bonds below).

Some bonds may also link to the rate of inflation. These are known as index-linked or inflation-linked bonds.

How and where do you invest in bonds?

Government bonds

The Central Bank of Ireland is responsible for maintaining the Register of Irish Government Bonds and Treasury Bills on behalf of the National Treasury Management Agency (NTMA). Visit the Central Bank of Ireland’s FAQs.

Irish Government bonds are issued by the National Treasury Management Agency (NTMA) and can be bought through listed stockbrokers known as ‘Primary dealers’. The full list of Primary dealers is available on the NTMA’s website.

Corporate bonds

If you want to buy corporate bonds, you can invest through:

• A stockbroker in an investment firm
• An investment broker
• A financial adviser

Is investing in bonds right for you?

Questions to ask your adviser and things to consider before investing in bonds.

If you invest in bonds, is your money protected? 

Bonds are generally not protected under the Investment Compensation Scheme (ICS), however if you invested indirectly in bonds, for example through a collective investment fund, part of your investment could be covered. For more information on eligibility criteria visit their website.

Tracker bonds

What are tracker bonds and how do they work?

A tracker bond is a fixed-term deposit account where you invest your money for a set period, usually between three and six years.

During this time, you won’t have access to your funds. However, these investments typically offer a high level of capital protection – usually between 90% and 100%. If the fund performs well, you may also receive a bonus or interest payment at the end of the term.

There are two main types of tracker bonds: Life insurance tracker bonds and Deposit tracker bonds

Pros:

• Opportunity to participate in potentially high-risk/high-return assets such as equities, with reduced risk
• High level of capital guarantee
• Potential to earn a bonus or interest if the funds perform well

Cons:

• No access to funds during term
• May be a high minimum investment needed
• You may get back less than the original amount invested if the capital is not 100% guaranteed

How do you earn money from investing in tracker bonds?

You can earn money at the end of the term by receiving a:

• Guaranteed return of a percentage of the capital you originally invested - (usually between 90 and 100%).
• Bonus payable at end of term related to rise in certain shared or commodities etc*.

* If the chosen shares or commodities do not rise over the period, there may be no bonus payable when the bond matures.

How and where do you invest in tracker bonds?

You can invest in tracker bonds through:

1. A life insurance company
2. A bank
3. An investment broker
4. A financial adviser

Use the Central Bank of Ireland's register to make sure the provider you choose is regulated.

Is investing in tracker bonds right for you?

Questions to ask your adviser and things to consider before investing in bonds.

If you invest in tracker bonds, is your money protected?

The deposit element of a tracker bond is covered under the Deposit Guarantee Scheme (DGS) up to €100,000. Visit the DGS website more information.

Property

What is an investment property and how does it work?

This is where you use your money to invest in something tangible, a property. You can invest in either commercial property or in residential property (including holiday homes).

You can invest in property in two ways:

1. Directly – by buying a property as an investment.
2. Indirectly – through a collective investment fund where your money is pooled with other people’s. Your money may be only invested in a range of properties or your money may also be invested in other assets, like cash, shares or bonds.

Generally, you will need to have either a large sum of money or you will have to borrow to invest directly in property.

Pros and cons of investing in property

The pros and cons can vary depending on whether you invest directly or indirectly in a property fund.

Pros:

• Potential income from rent and capital growth if the property value increases
• Good long-term growth potential
• Generally, less volatile than other investments such as shares

Cons:

• Not a quick process to sell if you need access to your money
• Affected by interest rate and market changes
• Maintenance and insurance costs can be high if you invest directly in property

How do you earn money from investing in property?

You can earn money by investing in property through:

• Rental income
• Capital growth if the value of the property rises

How and where do you invest property?

If you are considering investing in property directly, start by seeking independent financial and legal advice.

If you are considering investing in property indirectly through a collective investment fund, start by talking to:

• A financial adviser
• An investment broker
• An investment firm

Is investing in property right for you?

Questions to ask your adviser and things to consider before investing in property.

If you invest in property, is your money protected?

If you invest in property through a collective investment fund, you may be covered by the Investment Compensation Scheme (ICS). The scheme only applies in certain situations and doesn’t guarantee compensation for all losses. For more information on eligibility criteria visit their website.

Unit-linked funds

What are unit-linked funds?

A unit-linked fund is a pooled investment that allows you to combine your money with that of other investors. Fund managers will then invest this money in underlying assets in line with the objectives of the fund.

A pooled investment allows you to invest in a wider range of investments than might be possible if you were investing as an individual.

Pros:

• Potential diversification within your portfolio
• Potential for lower costs and fees as a result of money being pooled together
• Less work for you as the fund is managed by the financial provider
• Professional Investment Managers make decisions around investment strategy

Cons:

• Less control over your investment portfolio
• Investment managers make decisions around the investment strategy
• Fees and charges associated with the management of the fund
• As with all investments, performance is not guaranteed

How do you earn money from investing in unit-linked funds?

You will share any gains or losses of the fund with the other investors. Your policy documents will show which funds you have bought into and how many units you have been issued in each fund.

How and where do you invest in unit-linked funds?

You can invest in unit-linked funds through:

• A life insurance company
• A bank
• An investment broker
• A financial adviser

If you invest in a unit-linked fund, is your money protected?

Unit-linked funds are covered under the Investment Compensation Scheme (ICS). The ICS only pays compensation in specific circumstances, and you’re not guaranteed to get compensation for all losses. For more information on eligibility criteria visit their website.

Structured products

Structured products are fixed-term investments, usually lasting between three and ten years. They're pre-packaged by investment companies and give you access to a mix of assets, such as deposits, property, shares, bonds or commodities like gold and copper.

Types of structured products

All structured products are fixed-term investments, meaning your money is tied up for a set period – often several years. If you try to access your funds before the end of the term, you may lose some or all of your investment.

Structured products are grouped based on the level and type of capital protection they offer:

1. Conditional capital protection: Some or all of your money is protected only if certain conditions are met.
2. Partial protection: Only a proportion of your money is protected.
3. Full protection: 100% of your money is protected at maturity.
   

Conditional capital protection

These are also known as ‘soft’ capital protection. It is important to note that these types of products are ‘capital at risk’ products and your total investment may be lost.

A common example is a Kick-out bond. This type of product may mature early and return your investment – plus any bonuses – if it performs well and meets specific conditions.

The ‘conditional’ element means your capital is returned only if the product doesn’t fall below a set threshold. For example:

• You invest €1,000 for five years.
• The protection level is set at 50% of the starting price.

If the product performs well:

You may get back your €1,000 plus a bonus – say 20%, totalling €1,200. You might also be ‘kicked out’ early, with the bonuses/coupon payments, if performance targets are met.

If there’s no change:

You may only get back your original €1,000, with no bonus.

If the product performs poorly:

If the structured product ends at 51% of its starting value at maturity – just above the 50% threshold – you’ll still get back your original €1,000 investment, thanks to the Conditional Capital Protection feature.

If it drops below 50%:

You only get back the percentage it’s worth – e.g. 49%, or €490. In this case, you lose €510, or 51% of your original investment.

Partial protection

These products protect only a portion of your investment. For example, 90% of your capital might be protected by the ‘capital guarantee’, meaning 10% is at risk if the product performs poorly.

Partial protection products are also known as ‘capital at risk’ products.

Full protection

These can also be described as ‘100% capital protected’, or having ‘capital security’ or a ‘capital guarantee’. These products may also be described as having ‘hard’ capital protection. 

This means that when your investment matures you will get back, at least, the money you have invested, regardless of performance. So, if you invest €1,000 you will get back at least €1,000.

100% capital protected structured retail products have become less common in Ireland over the last number of years.

What’s important to know before you invest in a structured product?

Structured products can be complex, and there is a risk you could lose some or all of your money. Before investing, make sure you:

• Get financial advice from a qualified and regulated financial adviser to check if the product is suitable for you.
• Understand the main features of the product. You should be given a Key Information Document (KID), which outlines these details.
• Check the level of capital protection, for example, conditional, partial or full.
• Know how long your money is locked away. Can you afford to not have access to your funds for that period?
• Find out if you can access your money early, if needed.
• Understand your risk profile – that is, how much risk you’re willing to take. A financial adviser can help assess this by asking questions about your attitude to risk.
• Match your risk profile to the product’s Summary Risk Indicator (SRI) -The SRI is a guide to the level of risk of the product compared to other products, rated from 1 - 7. The higher the SRI score, the higher the risk of the product. Each product includes an SRI in the KID. This should align with your own risk level.
• Review the Product Performance examples in the KID, especially those showing ‘unfavourable’ or ‘stressed’ scenarios.
• Remember that past performance may not be a guarantee of future results. If marketing materials show positive past returns, consider this alongside the SRI score, any capital-at-risk warnings and the performance scenarios in the KID.

What is the Key Information Document (KID)?

The Key Information Document (KID) is a key document that must be provided to you before you invest in a structured product. It’s designed to help you understand the risks, costs and potential gains or losses. It also allows you to compare products from different providers in a standardised format.

The KID should be provided in addition to any marketing materials or brochures and must include:

• The name of the product and the provider
• The types of investors the product is aimed at
• The risk and reward profile of the product, including the maximum amount of capital you could lose and performance examples or scenarios
• The costs of investing, such as entry and exit charges and fund management fees
• Information on how and where to make a complaint if there’s a problem with the product or the person advising or selling it

It’s important to read the KID carefully and consider it alongside the investment firm’s product brochure.

What is the Summary Risk Indicator (SRI)?

The SRI is a risk scale that gives the product a score from 1 to 7. It helps you understand the level of risk compared to other products – with 1 being the lowest risk and 7 the highest.

What do the performance scenarios show?

The KID includes a table with four performance scenarios to show how your investment could perform under different market conditions:

• Stressed
• Unfavourable
• Moderate
• Favourable

Each scenario estimates the return you may receive, including any potential loss of capital.

Are structured products regulated in Ireland?

Before investing in a structured product, check that the provider is regulated by the Central Bank of Ireland. If the provider is regulated you will have more protections, including access to the Financial Services and Pensions Ombudsman.

Is your money protected if the provider cannot repay you?

The deposit element (the amount you originally invested) of a structured retail product may be protected by the Deposit Guarantee Scheme if the provider is unable to repay it, for example if they went out of business.

However, you should review the specific product terms and conditions to check if it is capital protected and/or covered by the Deposit Guarantee Scheme. If the provider is not based in Ireland, you may be covered under the other country’s compensation scheme.

Crowdfunding

What is crowdfunding?

Crowdfunding lets individuals or businesses raise money online without a bank loan. If you invest, you might earn a return or reward, but this isn’t guaranteed. It’s a risky form of investment, so make sure you can afford to lose some or all of the money you put in.

The most common types are:

1. Lending-based: You lend money for repayment with interest. This is known as peer-to-peer lending and is the most popular type in Ireland.
2. Equity-based: You invest for a share of profits or revenue.
3. Donations or rewards-based: You give money for a reward or to support a cause.

How is crowdfunding regulated in Ireland?

Crowdfunding Service Providers (the platforms that connect investors with businesses) are now regulated under EU law. Since 10 November 2021, these providers must be authorised by the Central Bank of Ireland.

Crowdfunding platforms and new EU rules

• 10 November 2023, or
• The day the platform gets authorised under the new EU Crowdfunding Regulation (ECSP)

What does authorisation mean?

Authorisation is when the Central Bank of Ireland officially approves a platform under the new EU rules. These rules aim to make crowdfunding safer and more consistent across Europe, giving you better investor protection and more choice.

When will this happen?

There’s no single date for all platforms. Each provider gets authorised individually once its application is approved. Platforms had to apply by 10 May 2023 and be authorised by 10 November 2023 to keep operating.

How can you check?

If you want to know whether a platform is authorised, you can check the Central Bank Register. 

What protections are in place for investors?

Authorised Crowdfunding Service Providers must include a clear warning on all advertisements stating that:

• Investing in crowdfunding projects carries risks
• You could lose part or all of your money
• Investments are not covered by the Deposit Guarantee Scheme or the Investor Compensation Scheme

If the provider is regulated, you’ll also have access to the Financial Services and Pensions Ombudsman if you need to make a complaint.

Crypto assets

What are crypto assets and how do they work?

Crypto assets are digital assets recorded on a blockchain (a shared digital record). They can be bought, sold and traded through online platforms and apps. Some crypto assets can be used for payments where a seller agrees to accept them, but many people buy them mainly as a speculative investment (hoping to sell later at a higher price).

Crypto assets are highly volatile and high risk. Their value can rise or fall very quickly, and you could lose some or all of the money you invest. Only invest money you can afford to lose.

Go to our crypto page for more information. 

No safety net if things go wrong

Crypto assets are not protected by statutory compensation schemes such as the Deposit Guarantee Scheme (DGS) or the Investor Compensation Scheme (ICS). If a provider fails, is hacked or turns out to be fraudulent, you will usually not be entitled to compensation.

Wallets and technology risk

Crypto assets are accessed using a digital wallet, which holds the keys that let you control your crypto:

• Public key: like an address others use to send you crypto assets
• Private key: the secret code that authorises transfers
• Seed phrase: a backup phrase to restore access

If you lose your private key or seed phrase, there is usually no way to recover your crypto assets.

Regulation and scams

Some crypto‑asset service providers may be authorised under EU rules – Markets in Crypto-Assets Regulation (MiCAR). Always check the provider is authorised and stay alert to scams, including fake investment platforms, impersonation, phishing and “confidence‑building” fraud.

Visit our other scams page for more information on crypto scams. 

What cryptocurrency scams should you watch out for?

Cryptocurrency scams are common. Here are the main types:

1. Exchange hacks. Scammers steal login details and remove funds. Use two-factor authentication to protect your account.
2. Wallet hacks. Scammers access your seed phrase through saved documents or cloud storage. Never share your seed phrase.
3. Social media scams. Fake accounts impersonate celebrities and offer giveaways. Any funds sent will be lost.
4. Social engineering scams. Phishing emails link to fake websites and ask for personal or banking details.

Always be cautious when it comes to crypto. If something sounds too good to be true, it probably is.

Binary Options

What are binary options and how do they work?

Binary options are a type of fixed-odds bet. You predict whether something will happen, for example, whether a share price will go up. If you're correct, you ‘win’ and earn a return. If you're wrong, you lose your full investment.

Are binary options banned in Ireland?

Yes. The sale, marketing and distribution of binary options to non-professional investors is banned in Ireland and across the EU. If you're contacted by a firm offering binary options, it may be a scam.

Why are binary options risky?

Binary options are priced like fixed-odds bets. You’re offered higher returns for low-probability outcomes and lower returns for high-probability ones. To make a profit, you need to beat the odds consistently, which rarely happens. Many investors suffer significant losses.

Contracts for Difference (CFD)

What is a CFD?

A Contract for Difference is an agreement between you and a seller (usually an investment firm) to exchange the difference in the price of an asset – such as a share – from the time you enter the contract to when the contract ends.

• You do not own the asset
• You are speculating on price changes
• If the price goes up, you make money
• If it drops, you lose money

CFDs are designed for short-term trading and are considered high-risk financial products.

Why are CFDs risky?

CFDs are complex and can be difficult to understand. Most firms do not offer investment advice, so you are responsible for your own decisions.

• You could lose more than you invest
• Many firms are not regulated. You can check if a firm is regulated using the Central Bank of Ireland's register.
• Even if regulated, the firm must assess whether CFDs are suitable for you

How are CFDs regulated in Ireland?

The European Securities and Markets Authority (ESMA) has restricted the sale of CFDs to non-professional investors across the EU, including Ireland. These rules aim to protect consumers from the risks associated with CFD trading.

How can you avoid CFD scams?