What are asset classes? An asset class is a group of investments or securities that share similar characteristics, such as their risk level, return potential, liquidity, and more. Each asset class has certain pros and cons, making them suitable for different types of investors. The five different forms of assets include:
- Equities: This investment avenue comprises stocks of companies. It may be a high-risk-return asset class.
- Fixed-income assets: This may include debt securities such as government and corporate bonds. This may be a low to moderately risky investment asset class.
- Commodities: This may include investments in precious commodities such as gold and silver, either by directly purchasing the commodity or through mutual funds and ETFs.
- Real estate: This investment asset class is relatively less liquid. Investors may invest in real estate by purchasing property or investing in real estate mutual funds, including REITs.
- Cash and cash equivalents: This is a short-term investment asset class. It may be suitable for investors seeking high liquidity.