Classes of Assets - Asset Class Definition
Basically there are four major classes of assets. They are:
- Stocks or equities
- Money market or cash equivalents
- Fixed income or bonds
- Real estate or tangible assets
When constructing your investment portfolio you may select any of them and make combinations out of them.
Even though individual stocks or mutual funds can perform in different ways, they are grouped together. This grouping is done since they respond to the different market conditions in a similar way.
In order to benefit from the advantages offered by each asset class you should try to include them all in your investment portfolio. In this way you will achieve greater levels of diversification within your portfolio and increase your chances of alleviating the negative impacts of a market down turn.
Generally, successful investors use the help of different systems to distinguish the bad trades from the good ones. One of the systems that are highly reputed in this field is MarketClub.
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