Investing Asset Classes
Investing Series I Education Hub
Hopefully you know what investing is, it is basically a long-term investment in different asset classes. Now we will talk about what are possible investment asset classes where you can invest your money.
Types of Assets
Cash: A cash bank deposit is the simplest, most easily understandable investment asset—and the safest. On the downside, the interest earned from cash socked away in a savings account seldom beats inflation. Fixed deposits (FDs) are less liquid instruments, but they typically provide higher interest rates than those in savings accounts. However, the money put into a FD is locked up for a period of time (months to years), and there are potentially early withdrawal penalties involved.
Stocks or Shares are the most popular investment assets. Stocks let investors participate in a company’s success via increases in the stock’s price and through dividends. Shareholders have a claim on the company’s assets in the event of liquidation (that is, the company going bankrupt) but do not own the assets.
Among all of the asset classes, cash being the most stable and alternative investments often being the most volatile. Sticking with index funds or exchange-traded funds (ETFs) that mirror the market is often the best path for a new investor. Stocks tend to have higher yields than bonds, but also greater risks. Many investment specialists recommend diversifying one’s portfolio.