What is an asset class?

An asset class is a classification of financial assets, such as stocks or bonds, that are classified into the same class because of common characteristics. For example, stocks usually pay variable. Dividend, while bonds generate fixed income. A balanced portfolio should contain a variety of different asset classes in order diversification.

Where have you heard about asset classes?

The Investment Guide guides readers through the different asset classes, emphasizing that the definition of asset classes has been broadened in recent years and now includes not only equities, bonds and "cash-like" (e. G., short-term money market instruments), it also includes commodities, currency, real estate, and collectibles (such as rare coins or stamps).

What you need to know about asset classes...

Investors can develop a portfolio that is diversified across different asset classes, depending on the asset class. The specific assets of each category are never exactly the same, for example, stocks vary greatly, but they have enough in common to be classified as one asset class.

From an investor's perspective, the point is that assets within one category perform similarly and differ significantly from other asset classes. As a result, stocks perform well during economic booms, while bonds are more attractive when trading is inactive.