Finance Investing

What is an Asset Class?

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?

Emergency FundAs highlighted above, the three major asset classes are stocks, bonds, and commodities. From our previous posts, we know what stocks and bonds are.

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.


References:

  1. https://www.investopedia.com/terms/a/assetclasses.asp
  2. https://www.flaticon.com/free-icon/bar-graph-with-dollar-sign_66590#term=stocks&page=1&position=5
  3. https://www.flaticon.com/free-icon/piggy-bank_584093#term=saving&page=1&position=5
  4. https://www.flaticon.com/free-icon/grain_71506#term=agriculture&page=1&position=8

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