You invest with the expectation that eventually your money will grow. But are your expectations in confirmation with the return characteristics of your investments? To set your expectations right having a good understanding of the different asset classes that collectively create your financial portfolio is very important. In this blog, you will understand the concept of asset classes, the risk they reflect and their return characteristics.
What are the Asset Classes?
Investments that exhibit similar characteristics such as returns, risks, and performance under particular market conditions are characterized as one particular asset class. Broadly, there are five major types of asset classes: a) Equities, b) Fixed Income Securities, c) Cash & Equivalent, d) Real Estate and e) Gold. While investing, asset allocation is very important, so that your money gets proportionality invested and you are not under-investing or over-investing in any of the asset class as it may put your money into risk.