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Let asset classes be your rock
We all want to think we have nice assets, right? Oh, maybe that’s just me. Let’s talk about assets in terms of investing today. For investors, asset classes are a guiding light. They organize the massive universe of investments into categories so investors can actually make sense of the whole darn thing and build a path to achieving their aspirations.
What are some common asset classes?
Basically, an asset class is a group of similar investments. Some common asset classes are stocks, bonds, cash, commodities (e.g., gold, corn, oil), and real estate. Each class often can be broken down even further. For instance, within stocks, a company’s stock can be categorized by its location, total value, industry, or other factors. So organized! What’s not to love?
Asset classes are like food groups
Speaking of love…. We all love food, right? Well, just like every food group contains foods that share similar characteristics, every investment fits into an asset class based on its characteristics. And just like you need a variety of food groups to be healthy, your investment portfolio needs a variety of asset classes.