What is an asset class and which one should you invest in?
Asset Class Selection
There are three main asset classes; cash, bonds and shares. The characteristics of each are set-out below:
| Asset Class | Purpose | Risk | Time Frame | Investment Options |
| Cash | Have money available for short term cash needs | Low | Short term | High interest savings accounts, term deposit, cash exchange traded funds |
| Bonds | Earn income and protect capital | Low – High | Short to medium term | Directly through purchasing Government bonds (low risk) to junk bonds (high risk).
Indirectly through bond exchange traded funds, actively traded bond funds |
| Property | Earn income via rent and increase the value of your investment over time through property price increases | Medium – High | Medium to long term | Directly through purchasing a property.
Indirectly through a property exchange traded fund, a property managed fund, or through shares in property companies |
| Australian Shares | Earn income via dividends and increase the value of your investment over time through share price increases | High | Medium to long term | Directly through shares purchase.
Indirectly through equity exchange traded funds, equity actively managed funds. |
| International Shares | Increase the value of your investment over time and spread your risk globally, rather than being concentrated in the Australian market only | High | Medium to long term | Directly by purchasing shares on foreign stock exchange.
Indirectly through equity exchange traded funds, equity actively managed funds. |
In our masterclass series we delve into each asset class (see links above) to explain exactly how you can invest in it, and why you may want it to form part of your portfolio.
