Beginner's Guide to Asset Classes

source: www.investopedia.com/articles/basics/11/3-s-simple-investing.asp

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Beginner’s Guide to Asset Classes

 

stable - volatile에 따라 나뉨.

 

일반적으로 알려진 각 asset class의 risk 정도에 따라 오름차순으로 적음.

 

Cash

pros: simple, understandable, safest

 

cons: inflation

 

Bonds

debt instrument representing a loan

 

usually by the corporate and the government

 

the rates are determined by the Interest rates

 

Mutual Funds

more than one investors pools their money together to buy securities

 

passive becasue portfolio managers pools investment to stocks, bonds, etc

 

high costs from fees

 

Index Funds

a type of Mutual Funds or Exchange Traded Funds

 

a portfolio of stocks or bonds designed to mimic performance of a financial market index

 

lower expenses and fees than actively managed funds

 

passive investment strategy

 

seek to match the risk and return of market on the theory that the market will outperform single investment in the long run

 

mimicking the index like S&P 500

 

portfolio changes when the benchmark indexes change or managers change the weights

 

pros: diversification, low expense ratios

 

cons: vulnerable to market swings, limited gains

 

Exchange Traded Funds

from mid 1990s

 

similart to Mutual Funds but trade thruout the day on a stock exchange so thevalue can change drastically 

 

Stocks

no description needed

 

Real estate

no description needed

 

Real Estate Investment trusts(REI): like Mutual Funds and trade like stocks

 

Hedge Funds and private equity funds

may invest in spectrum of assets designed to deliver beyond market returns called ‘alpha’.

 

Commodities

gold, crude oil or agricultural prdcts