What are the Main Asset Classes | The 5 Types of Assets to Invest in (INVEST LIKE THE RICH!)

In this video I set out the 5 main asset classes, exactly what they all mean and how they stack up as investment options! I also explain why it’s important to invest in more than just one of these types of assets!

Link to my video on index funds: https://youtu.be/VPB1BJmDCw0

If you’re interested in checking out the gear I used to put this video together, I’ve included some links below:

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THE FIVE MAIN ASSET CLASSES ARE:

#1 CASH
Cash is low risk and it therefore offers the lowest return. Investments that you can make with cash are things like savings accounts and fixed term deposits.

Cash is usually a good option for people who are very risk averse, or those looking for a temporary home for their money between longer-term decisions.

Before opening a savings or fixed term deposit account, shop around as rates differ slightly and some banks will offer you a cash bonus for switching your account to them, which is basically FREE MONEY!

#2 – BONDS
Bonds are basically loans that companies and governments issue to investors as a way to raise money. They provide a regular flow of income over a set period of time, and a promise to re-pay the investors capital to them on a set date in the future.

Bonds come with different levels of risk and reward, but over-all they are seen as a fairly low-risk investment, particularly those issued by Governments.

One of the easiest ways to invest in bonds is through a bond index fund or ETF which provides access to a diversified pool of bonds within one investment. My video on index funds is linked above so be sure to check it out!

#3 – STOCKS
Stocks represent a portion of ownership in a company and entitle the holder to a percentage of that company’s assets and profits.

Depending on a company’s objectives, profits are usually either paid to investors as dividends or re-invested in an effort to grow the business and make it more valuable.

There is always the risk that a company might not perform well which could cause its share price to fall in value, so stocks are seen as a higher risk asset class.

Over time, the stock market tends to rise in value so investing in a well-diversified portfolio of stocks can reduce risk and help investors benefit from the potential for longer term growth.

Index funds or ETFs are a great way to invest in stocks, so again, be sure to check out my video on this which is linked above.

#4 – REAL ESTATE
Real Estate investors usually either purchase a property with the intention of selling it for a profit (buy to sell), or with the intention of letting it out and receiving the monthly rental income (buy to let).

The ability to use leverage, whilst it does come with risks, is a big benefit as it can increase the potential returns on investment.

Real estate is illiquid, and it can often take months to sell a property and turn your investment into cash.

Real Estate Investment Trusts (REITS) are companies that own, operate or finance income producing real estate, and offer investors an opportunity to benefit from the income produced by real estate without needing to physically buy a property themselves. This can be a great way to get started.

#5 – COMMODITIES
These are the basic goods used in international trade and traditionally include natural resources and agricultural products such as beef, wheat, oil and gold.

Commodities are usually traded in bulk on a futures market, where investors buy and sell contracts providing a right or obligation to buy or sell a set amount of a commodity at a fixed price on a set date in the future.

Futures trading can be risky so most individual investors tend to stay away from it, but commodities do help to balance risk in a portfolio otherwise dominated by stocks as they tend to act in opposite ways during different market cycles.

There are mutual funds that invest in commodities and for most investors this is likely the best way to go to get exposure to commodities without taking on the additional risks of directly trading in futures.

WHY IT’S IMPORTANT TO INVEST IN MORE THAN JUST 1 ASSET CLASS:
Investing all of your money into just one asset class is a high risky strategy because if that asset class doesn’t perform well it can have a huge impact on the value of your investments.

By investing across different asset classes that work in different directions, it helps to smooth out swings in performance and provides a more stable and consistent return.

I really hope you found this video helpful, and if you did please be sure to give it a like and subscribe to the channel for more videos! Thanks so much for watching!!

*I may earn a referral bonus or affiliate commission through some of the links that appear in this video description. The offers referred to are correct at the time of posting but do be aware that some offers may no longer be available.

Видео What are the Main Asset Classes | The 5 Types of Assets to Invest in (INVEST LIKE THE RICH!) канала Ryan Gibson