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What are the Major Asset Classes?

Before you try to get an in-depth view of the investment landscape, you should learn more about investment management's basic principles. You may have to enlist the help of private investment management in 10924 advisors to talk to you more about the different major asset classes.



Major Asset Classes You Should Know About


Cash


The safest and simplest investment asset is a cash bank deposit. Besides giving you a clear idea of the interest you’re supposed to earn, it also guarantees that you’ll get your capital back. However, it’s important to note that the cash you have in your savings account won’t likely beat inflation.


Certificates of deposit (CDs) are instruments that are highly liquid and provide higher interest rates compared to those that are in savings accounts. However, your money gets locked up for a long time, and it may involve early withdrawal penalties.


Bonds


When a borrower secures funding from an investor, the debt instrument used to represent the loan is called a bond. In exchange for using the lender’s capital, the borrower's fixed interest rate is issued to the lender. Since the interest rates determine the bond rates, bonds are heavily traded when central banks or the Federal Reserve raise interest rates.


Mutual Funds


When securities are purchased by a group of investors pooling their money together, they use mutual funds. Although this type of investment is allocated and distributed into bonds, stocks, and other securities, mutual bonds aren’t passive. At the end of the trading day, mutual funds are valued. After the market closes, each buy-and-sell transaction is also executed.


Stocks


As an investor, you’ll be able to take part in an organization’s success. When the company’s stock price increases, you’ll get to participate through dividends. If you’re a shareholder, you claim the organization’s assets when the company goes bankrupt, but you don’t own the assets.


Exchange-Traded Funds (ETFs)


ETFs are like mutual funds except that they get traded on a stock exchange throughout the day, their value can drastically change anytime, and they reflect the stock’s buy-and-sell behavior.



Looking for a Private Investment Management 10924?


Look no further than the team of financial experts at 1879 Advisors. We can help you construct a diverse yet concise portfolio. Schedule an appointment today.

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