Let’s reflect back on our previous post where we discussed the different types of U.S. stocks that we can invest in.
Stocks, or equities are an asset class – a group of investments that share similar characteristics.
You can think of an asset class as different categories that you can purchase to create a well-diversified portfolio.
What are the different types of asset classes?
A commodity is a natural resource that is inclusive of: oil, gas, gold, metals, corn, etc and other assets.
Combined, these three different asset classes are used to construct a well-diversified portfolio of investments. Now that we have an understanding of the basic building blocks of a portfolio, we will discuss the importance of diversification in our next post.