subject: Guide To Asset Classes [print this page] When it comes to investing, there are different Investment Types And Different Asset Classes. However, there are basically four classes which are most popular with investors. So what are these four? Bonds, property, short term investments and shares. Of course, out of all such investments, shares are the most risky, followed closely by property.
The top four classes which investors prefer in relation to investments are often bonds, property, short-term deposits and shares. As such, if one is interested in investing, one may want to determine if one wishes to invest in one or all four asset areas. For, the more diversity one has, often the more likely one is going to see a return on such investment.
Of course, one may want to know more about each investment class before deciding whether or not to invest. For, each class has different rules on both initial deposits, the length of time money may be held and how payouts are received by investors. As such, one can then make a final decision on whether or not to invest based on current financial concerns in relation to both oneself and the market at the time.
As to the different types of investments, bonds are similar to IOUs, company or organization provides investor with a bond which the company holds, then after a certain period of time, the individual receives the value of the bond plus any interest earned. Also, while bonds can be traded, often one must be investing through a managed fund in order to experience such trades. As such, most individual investors avoid investing in such bonds.
However, as bonds lock money away for a set period of time, most often without the option of early withdrawal, one need be sure one has such money to invest. In addition, while some bonds can be traded, generally bonds are not seen as a good investment for short-term gains. As such, smaller investors may want to invest in such bonds through a managed fund rather than independently.
So, whether one is interested in investing in property or shares in the stock market, one is going to be taking a risk. For, there are no guarantees that property values hold or that companies can earn a profit. As such, many individuals have both gained and lost a great deal of money on such investments.
However, if one pays cash for a home, whether to live in or flip and resale, one has a better chance of seeing a return on such investment. Although, one still must pay for any upkeep on such property along with any associated property tax and insurance. Otherwise, one may as well be renting. For, unless one pays such fees, often one can lose a home one owns just as easily as renters can be evicted for non-payment.
Of course, some people feel rental property is a good investment. However, others who have owned rentals often feel differently. For, while one can oversee a rental, one must cover the cost of all repairs while expecting renters to pay on time.
Whereas, a short term deposit or term deposit is a deposit which has a fixed maturity date. Such financial products include, but are not limited to, Certificates of Deposit and Money Market accounts. As such, these have become some of the most popular investments with individual investors.
Regardless, if one chooses to invest in shares, one is taking a greater risk than in most other investments. Still, one can see a great deal of gain and loss over time. Of course, a bonus of such investment is that one often receives regular dividend payments off company profits.
To this end, depending on the level of risk one is willing to take, there are several ways one can invest. However, while most assure one any initial deposits are returned along with interest, this is not true when it comes to shares. Of course, if one can invest in multiple Investment Types And Different Asset Classes, one is going to have the most chance of seeing a return on such investments.
