There are many different types of investment assets available to help you grow your wealth. Each has its own set of benefits and risks that you should consider before investing. Here are 21 different types of investment assets that you can use to grow your wealth.
What Are Investment Assets?
Firstly, what are investment assets? An investment asset is anything that can be bought and sold in order to generate income or appreciation. Common examples of investment assets include stocks, bonds, real estate, and collectibles. Investment assets are often categorized according to their risk level, with higher-risk assets offering the potential for higher returns but also carrying more risk of loss. Investing can be a good way to help increase your net worth and achieve your financial goals.
More essential reading: should i save or invest?
What Are Asset Classes?
An asset class is a group of securities that tend to behave similarly in the marketplace. While there are many different types of investment assets, they can generally be divided into four categories: cash and equivalents, fixed income, equities, and alternative investments.
Cash and equivalents are the simplest and most liquid of all the asset classes. They include things like cash, Treasury bills, and money market funds.
Fixed income assets are a bit more complicated, but they can be broadly classified as anything that pays a fixed rate of return, like bonds. These can provide a good source of recurring income.
Equities are ownership stakes in public companies, and alternative investments are anything that doesn’t fall into one of the other three asset classes. These are different types of investments to traditional stocks and bonds, including assets like real estate, private equity, and cryptocurrency.
View our 10 step beginner guide to investing and wealth building
What To Know Before Selecting Asset Classes To Invest In
There are a few key things to know before selecting asset classes for investment.
Different Types Of Investments
Different types of investments can be divided into two main categories: growth investments and income investments. Growth investments, such as stocks and mutual funds, are typically purchased with the goal of earning capital gains. Income investments, such as bonds and real estate, generate regular cash flow in the form of interest or rental income.
Trading Vs Investing
It’s also important to understand there is a difference between trading and investing the different types of investment assets. The main difference between a trader and an investor is that a trader looks to make money in the short term, while an investor looks to make money in the long term.
A trader is more concerned with the volatility of the market and making money off of short-term movements including the use of short selling. An investor is more concerned with the overall direction of the market and making money off of long-term trends.
Risk/Reward Of Asset Classes
The risk/reward ratio of an investment is the measure of risk versus the potential return. The higher the risk, the higher the potential return. The lower the risk, the lower the potential return. An investor should consider their own circumstances when deciding which different types of investments to make.
Other Things To Consider
When selecting asset classes for investment, an investor also needs to consider their capital, investment time horizon, trading fees and taxes. Capital refers to the amount of money that the investor has to invest. The investment time horizon is the amount of time that the investor has to hold the investment. Trading fees are the fees charged by the broker for executing trades. Taxes are the taxes that the investor will owe on any gains from the investment.
If you are new to investing, you should check out the answers to these common investing questions and misconceptions.
21 Different Types Of Investments
The below list of assets to invest in includes a wide range of asset classes suited to all risk types and trading and investing experience levels. So you will be able to pick and choose different types of investment assets to build your own diversified portfolio and grow your wealth.
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Stocks
A stock is a share in the ownership of a corporation. When you buy a stock, you become a partial owner of the corporation. Owning a stock entitles you to a share of the corporation’s profits or losses and may provide dividend income. Publicly held corporations are required to issue stocks in order to raise capital to finance their operations.
There are two main types of stocks: common stock and preferred stock. Common stock is the most common type of stock. It entitles the owner to vote at shareholder meetings and to receive dividends, if the corporation declares them. Preferred stock does not usually entitle the owner to vote, but it does entitle the owner to receive dividends before common stockholders and to receive payment in the event of the corporation’s liquidation.
The advantages of investing in stocks include the potential for earning high returns and the ability to control a large share of the company’s assets. The disadvantages of investing in stocks include the potential for loss and the possibility of being a minority shareholder.
Stocks are traded on stock exchanges, which are markets where stocks and other securities are bought and sold. The most well-known stock exchange in the United States is the New York Stock Exchange. Trading stocks is relatively easy and can be done online.
The risk level of investing in stocks is relatively high. This is because the value of stocks can fluctuate greatly, and there is always the possibility of the company going bankrupt. However, the potential for high returns can make investing in stocks a very attractive option for many people, making them one of the most popular asset classes for investment.
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Bonds
A bond is a debt security, similar to an IOU. When you purchase a bond, you are lending money to the issuer, which could be a government, municipality, or corporation. In return for your loan, the issuer promises to pay you interest (coupons) at a fixed rate for a certain period of time (maturity), and to repay the principal (face value) when the bond matures.
The advantages of bonds include:
-A fixed rate of return
-The ability to diversify your portfolio
-The potential to receive income payments
-The stability of principal
The disadvantages of bonds include:
–Inflation risk
-Interest rate risk
-Reinvestment risk
-Default risk
Bonds are traded in the secondary market, after they are issued in the primary market. The price of a bond is based on the interest rate, which is the yield. The yield is the percentage of the bond’s price that the bondholder will receive in interest payments. The higher the yield, the higher the price of the bond.
The risk level of bonds is lower than stocks, but higher than cash. Along with stocks and mutual funds, they are one of the most common and traditional types of investment assets.
Essential reading: How to invest in bonds explained.
Mutual Funds
A mutual fund is a type of investment vehicle consisting of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, or other asset classes. Mutual funds are operated by professional money managers, who allocate the fund’s assets and attempt to produce capital gains or income for the fund investors.
Advantages of mutual funds include professional money management, diversification, economies of scale, and liquidity. Disadvantages include potential lack of control, high fees, and low transparency.
Mutual funds are typically traded on stock exchanges, and can be bought and sold through brokerages. They are typically categorized by their investment objective, which defines the types of securities the fund will invest in. Funds may also be categorized by their structure, such as open-ended or closed-ended.
The risk level of a mutual fund is dependent on the types of investment assets it invests in. For example, a fund that invests in stocks will have a higher risk level than a fund that invests in bonds.
Cash
A cash savings account is a type of investment account where you can deposit and withdraw money as you please, and the interest you earn is typically higher than that of a regular bank account.
Cash savings accounts can be used for short-term or long-term savings goals. The main advantage of a cash savings account is that it is a very low-risk investment. The interest rate on cash savings accounts compounds, so your money will grow over time. Another advantage of cash savings accounts is that they are FDIC-insured, so your money is protected if the bank fails.
The main disadvantage of cash savings accounts is that they offer a very low rate of return. If the interest rate is lower than the current rate of inflation then you will actually be losing money.
Cash is one of the safest asset classes to invest in but is the least rewarding. However, cash savings accounts can be useful for creating a personal contingency fund to be used in emergencies. If you are looking to grow your money quickly, you will likely be better off with different types of investments.
If you wish to save some of your cash in savings accounts, ensure you opt for high yield or Certificate of Deposit accounts. Find the best online savings accounts interest rates.
Money Market Funds
A money market fund is an investment fund that pools money from many investors to purchase short-term debt securities, such as government bonds, corporate debt, and municipal bonds. Money market funds are managed by professional portfolio managers who seek to preserve the value of the fund’s portfolio and to earn a small amount of interest.
The advantage of investing in a money market fund is that it offers a safe and convenient way to invest in short-term debt securities. The disadvantage is that the return on investment is typically lower than that of other investments, such as stocks and bonds.
Money market funds are traded on the secondary market, which means that their prices can fluctuate. They are also subject to interest rate risk, which means that their value will rise and fall as interest rates change.
Money market funds have a low risk level compared to other types of investment assets, such as stocks and mutual funds.
Cryptocurrency
Cryptocurrencies are digital or virtual tokens that use cryptography to secure their transactions and to control the creation of new units. Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control.
Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Cryptocurrencies are often traded on decentralized exchanges and can also be used to purchase goods and services.
Advantages of investing in cryptocurrency include the potential for high returns, price appreciation, and diversification. Cryptocurrencies are also one of the relatively new asset classes to invest in and have been subject to high price volatility. As a result, investing in cryptocurrency may be considered a high-risk investment.
Learn the basics of cryptocurrencies in our post covering cryptocurrency for beginners.
ETFs
An ETF, or exchange traded fund, is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. ETFs are similar to mutual funds in that they are a collection of many different investments, but they trade like a stock on an exchange.
The main advantages of ETFs are that they are low cost, highly liquid, and diversified. They also have the advantage of being traded on an exchange, which allows investors to buy and sell them throughout the day. The main disadvantages of ETFs are that they are not as well regulated as mutual funds and they can be more volatile.
ETFs are considered to be a moderate risk investment. They are not as risky as investing in individual stocks, but they are more risky than investing in bonds or index funds.
Commodities
Commodities are physical goods that are used as inputs in the production of other goods or services. The most common commodities include metals (such as iron, copper, and aluminum), energy (such as oil and natural gas), and agricultural products (such as corn, wheat, and soybeans).
Advantages of investing in commodities include the potential for high returns and the hedging benefits they provide against inflation and other economic risks. Disadvantages include the high level of risk involved and the difficulty of trading commodities.
Commodities are traded on exchanges around the world. The most popular exchange for trading commodities is the Chicago Mercantile Exchange. Commodities are also traded on the London Metals Exchange and the Tokyo Commodity Exchange.
The risk level of investing in commodities is high. Prices can be volatile and are often influenced by factors such as weather, politics, and economic conditions.
Interested in learning more about commodities? Check out our commodities 101.
Find your favorite asset classes to invest in and the best online trading platforms at Supermoney.
Collectibles
Collectibles are items that are considered to have value because of their rarity, condition, or association with a particular event or person. They are one of the more alternative asset classes. Many collectibles are traded on secondary markets, such as eBay or Sotheby’s, where their value is determined by supply and demand.
Advantages of investing in collectibles include the potential for appreciation in value, the ability to enjoy the item while it appreciates, and the potential to generate income through selling the item.
Disadvantages of investing in collectibles include the risk of the item depreciating in value, the high cost of some items, and the difficulty of storing and insuring the item.
Collectibles are considered to be a high-risk investment, due to their lack of liquidity and the potential for fraud. Learn more about the pros and cons of collectible investments.
Whiskey
There are two primary ways to invest in whiskey – through buying bottled whiskey or through buying cask whiskey.
Bottled whiskey is whiskey that has been bottled and is ready to be consumed. It can be purchased from a variety of sources, including liquor stores, online retailers, and auction houses. When buying bottled whiskey, investors should be aware of the age of the whiskey, as well as the distillery where it was produced. Older, more rare bottles of whiskey can fetch higher prices, but may also be more difficult to find.
Cask whiskey is whiskey that has been aged in wooden barrels, and has not yet been bottled. It can be purchased from distilleries, cooperages, and private collectors. When buying cask whiskey, investors should be aware of the age of the whiskey, as well as the type of barrel in which it was aged. Older, more rare casks of whiskey can fetch higher prices, but may also be more difficult to find.
Both bottled and cask whiskey can be traded on secondary markets, such as online exchanges. The prices of both types of whiskey can be volatile, and are influenced by a number of factors, including global demand, production levels, and geopolitical events.
Whiskey is a relatively high-risk investment, due to the volatile nature of the market. However, investors who are willing to accept this risk can potentially reap substantial rewards. Check out the easiest way to invest in Scotch cask whisky.
Foreign Currency
Currency investing is simply investing in a foreign currency. Currencies are traded on the foreign exchange market. The value of a currency is based on supply and demand. When demand for a currency is high, the value of the currency increases. When demand for a currency is low, the value of the currency decreases.
The advantages of currency investing are that it can be a very profitable investment, and it is a very liquid market. The disadvantages of currency investing are that it is a very volatile market, and there is a lot of risk involved.
Currencies are traded through brokers, and the most common way to trade currencies is through currency pairs. The most common currency pairs are the EUR/USD, GBP/USD, and USD/JPY. When you trade a currency pair, you are buying one currency and selling another. For example, if you buy the EUR/USD, you are buying Euros and selling US Dollars.
The risk level of currency investing is high. The reason for this is because the value of a currency can change very quickly. This can be either a good thing or a bad thing. If you are able to predict the movement of a currency, you can make a lot of money. However, if you are wrong, you can lose a lot of money.
Private Equity
Private equity is a type of investment that is not traded on public markets. Private equity is ownership in a company that is not publicly traded. Private equity is usually invested in by institutions or high net worth individuals, which usually excludes most ordinary investors. The main advantage of private equity is the potential for high returns.
Private equity is also less liquid than publicly traded securities, so it is a higher risk investment. Whilst these types of investment assets are held privately, there are some stocks and funds available of private equity companies that can be traded publicly.
Futures
Futures contracts are agreements to buy or sell an asset at a future date at a price agreed upon today. Futures contracts are standardized so that they can be traded on an exchange. The asset underlying a futures contract can be a commodity, like corn or gold, or a financial instrument, like Treasury bonds.
Futures contracts are traded on an exchange and are cleared by a central clearinghouse. The exchange guarantees that the trade will be executed and that the clearinghouse will guarantee the performance of the contract.
Futures contracts are leveraged instruments, meaning that a small amount of money deposited with the exchange can control a much larger value of the underlying asset. This leverage can magnify both profits and losses.
The main advantage of futures contracts is that they provide a way to hedge against price risk. For example, a farmer who is worried about the price of corn going down can sell a corn futures contract. If the price of corn does go down, the farmer will make a profit on the contract.
The main disadvantage of futures contracts is that they are risky. The leverage inherent in futures contracts means that a small move in the price of the underlying asset can cause large losses. Futures contracts are also subject to the risk of default by one of the parties.
Real Estate
Real estate is another one of the popular alternative asset classes for investment. There are many ways to invest in real estate, from buying physical property to investing in REITs (real estate investment trusts). Each has its own advantages and disadvantages, and each is traded differently.
Physical property is the most direct way to invest in real estate. You buy a property, usually through a broker or agent, and then either rent it out or sell it for a profit. The main advantage of this method is that you have direct control over the property. The main disadvantage is that it can be time-consuming and expensive to buy and manage a property.
REITs are another way to invest in real estate and build rental income. REITs are companies that own and operate real estate properties. You can buy shares of REITs, which trade on major exchanges like stocks, and then receive dividends based on the performance of the REIT. The main advantage of REITs is that they offer a more hands-off way to invest in real estate. The main disadvantage is that you do not have direct control over the properties and you are subject to the same volatility as the stock market.
Real estate investment trusts (REITs) are companies that own, finance, and operate income-producing real estate. There are two main types of REITs:
- Equity REITs – These REITs own and operate real estate properties. The income from these properties is distributed to shareholders as dividends.
- Mortgage REITs – These REITs invest in mortgages and mortgage-backed securities. The income from these investments is distributed to shareholders as dividends.
Advantages of REITs:
-Diversification: REITs offer investors a way to diversify their portfolios. By investing in REITs, investors can gain exposure to a variety of real estate assets, including office buildings, shopping malls, warehouses, and apartments.
-Liquidity: REITs are traded on major exchanges, which makes them easy to buy and sell.
-Income: REITs are required to pay out at least 90% of their taxable income to shareholders in the form of dividends. This makes REITs an attractive investment for income-seeking investors.
Disadvantages of REITs:
-Volatility: The share prices of REITs are subject to the same volatility as the stock market.
-Lack of control: Shareholders of REITs do not have direct control over the properties that the REIT owns.
REITs are a type of security that invest in real estate and are traded on major exchanges. REITs offer investors a way to diversify their portfolios and receive income from their investments. However, REITs are subject to the same volatility as the stock market and shareholders do not have direct control over the properties that the REIT owns.
Learn how to make passive real estate income with REITs.
Gold
There are many different ways to invest in gold, including physical coins and bars, gold mining company stocks, futures and other trading. Each has its own advantages and disadvantages, and its own risk level. This makes gold quite different to many other types of investment assets.
Physical gold coins and bars are a direct investment in gold. You are buying the metal itself, and so the price of your investment will go up and down with the price of gold. One advantage of this is that you can hold the metal in your own hand – you do not have to rely on anyone else to hold it for you. Another advantage is that you do not have to pay any storage or other fees (although this is less secure and likely incurs insurance costs).
However, there are some disadvantages. First, it can be difficult to sell your gold if you need to – you may have to find a buyer who is willing to pay the current market price for gold, which can be volatile. Second, if the price of gold falls sharply, you could lose a lot of money. Also, storing gold at home is an increased security risk from theft.
Gold mining company stocks are another way to invest in gold. You are buying shares of a company that mines gold. The price of your investment will go up and down with the price of gold, but it will also be affected by the company’s financial performance. One advantage of this is that you can sell your shares more easily than you can sell physical gold. Another advantage is that you may get dividends from the company if it is doing well.
However, there are some disadvantages. First, the company’s financial performance can be volatile, so the price of your shares can go up and down a lot. Second, if the company goes bankrupt, you could lose all of your investment.
Futures and other gold trading are another way to invest in gold. With futures, you are buying a contract to buy or sell gold at a future date. Other gold trading includes buying and selling gold ETFs, options, and other derivatives. The price of your investment will go up and down with the price of gold, but it will also be affected by other factors, such as the demand for gold and the supply of gold.
One advantage of this is that you can trade gold without actually owning any gold. Another advantage is that you can use leverage to magnify your profits (or losses).
However, there are some disadvantages. First, it can be difficult to understand all of the factors that affect the price of gold. Second, you can lose a lot of money if you use too much leverage or if the price of gold moves against you.
Gold has so many different ways to invest compared to most other types of investment assets. If you’re thinking of investing in gold, first check out our gold investment guide.
Peer To Peer Lending
Peer to peer loans are a type of investment where individuals can loan money to other individuals or businesses through an online platform. The loans are typically unsecured, meaning that they are not backed by any collateral. The interest rates on peer to peer loans are generally higher than those offered by traditional banks, but the loans are often easier to qualify for.
The main advantage of investing in peer to peer loans is the potential for high returns. The interest rates on these loans are often much higher than what you could get from a traditional bank. This means that you could potentially earn a lot of money by investing in peer to peer loans.
The main disadvantage of investing in peer to peer loans is the risk involved. These loans are often unsecured, which means that they are not backed by any collateral. This means that if the borrower defaults on the loan, you could lose all of your investment.
Peer to peer loans are typically traded on online platforms. One of the most popular platforms for trading peer to peer loans is Lenme. Lenme is an online marketplace that connects borrowers and lenders.
The risk level of investing in peer to peer loans is high. These loans are often unsecured, which means that they are not backed by any collateral. This means that if the borrower defaults on the loan, you could lose all of your investment.
Luxury Goods
Luxury goods are a type of investment that can be made in physical items such as watches, handbags, jewelry, and clothing. These items are often made with high-quality materials and workmanship, and they can be quite expensive.
Luxury goods can be a good investment because they can appreciate in value over time, and they can also be used as collateral for loans. However, luxury goods can be difficult to trade and can be quite risky because their value can fluctuate greatly.
View our guide to investing in luxury goods.
Royalties
A royalty is a payment made by one party to another for the use of an asset, often in the form of a natural resource. The owner of the asset may receive a percentage of the revenue generated from the use of the asset, or a fixed amount of money. The payment may be made on a regular basis, or as a one-time payment.
Royalties are often used as a financing mechanism for projects that require large up-front investment, such as the development of natural resources. The owner of the asset receives a stream of payments that can be used to finance the project, without having to take on debt or sell equity in the project.
Royalties can be traded on secondary markets, which allows investors to buy and sell rights to future payments. The risk level of investing in royalties depends on the asset that is being exploited and the terms of the agreement between the parties.
Venture Capital
Venture capital is a type of private equity, which means that it is not traded on public markets like stocks and bonds. Venture capitalists invest in early-stage companies that are too young to go public and are therefore not able to raise capital through an initial public offering (IPO). These companies are typically high-risk, high-reward investments.
The advantage of venture capital is that it can provide a much needed influx of cash for young companies that are trying to grow quickly. The disadvantage is that venture capitalists often have a lot of control over the companies they invest in and can make decisions that are not in the best interests of the company or its employees.
Venture capital is considered to be a high-risk investment, but it can also offer high returns if the company is successful.
Differences between private equity vs venture capital explained
Art
Art investing is the practice of investing in art as a financial asset. The value of art can be determined by its aesthetic value or by its market value. Art that is bought as an investment is usually bought at a price below its market value and sold at a price above its market value. The difference between the buy price and the sell price is the profit that the investor makes.
Art can be a good investment because it can appreciate in value over time. The value of art is not subject to the same fluctuations as the stock market and other financial assets. Art is also a physical asset that can be enjoyed by the owner.
The main disadvantage of art investing is that it can be difficult to sell art at a profit. There is no guarantee that the value of art will appreciate over time. Art is also an illiquid asset, which means it cannot be easily converted into cash, unlike other types of investment assets including stocks and bonds.
Art is traded in the secondary market, which is the market for art that has already been sold. The secondary market is riskier than the primary market, which is the market for art that is being sold for the first time. The secondary market is also less liquid than the primary market.
Equity Crowdfunding
Equity crowdfunding is a type of crowdfunding that allows people to invest in a company or project in exchange for equity. This means that they will own a share of the company or project and will be entitled to a portion of the profits (if any) that it makes. They are types of investment assets gaining more popularity among the wider public.
Equity crowdfunding can be a great way for companies to raise money and for investors to get in on the ground floor of a potentially successful venture. However, it is important to remember that equity crowdfunding is a high-risk investment and there is no guarantee that you will make any money back. It is among the more high risk asset classes to invest in.
How does equity crowdfunding work?
Equity crowdfunding works by allowing people to invest money in a company or project in exchange for equity. The amount of money that you can invest will depend on the company or project, but it is typically a minimum of $100. When you invest in a company or project through equity crowdfunding, you will be given a certain number of shares. These shares will entitle you to a portion of the profits (if any) that the company or project makes.
What are the advantages of equity crowdfunding?
There are a few advantages to equity crowdfunding:
- It allows companies to raise money without having to go through traditional channels such as banks or venture capitalists.
- It allows investors to get in on the ground floor of a potentially successful venture.
- It can be a more democratic way of raising money, as anyone can invest regardless of their net worth.
What are the disadvantages of equity crowdfunding?
There are also a few disadvantages to equity crowdfunding:
- It is a high-risk investment, as there is no guarantee that you will make any money back.
- You may not have any control over how the company or project is run.
- The company or project may not be successful, in which case you will lose your investment.
How are equity crowdfunding investments traded?
Equity crowdfunding investments are typically traded on online platforms. These platforms allow investors to buy and sell shares in companies or projects.
What is the risk level of equity crowdfunding?
Equity crowdfunding is a high-risk investment. This means that there is a chance that you could lose all of the money that you invest. You should only invest money that you are prepared to lose.
Which Are The Best Asset Classes To Invest In?
There is no one size fits all answer to the question ‘which are the best asset classes to invest in?’ as it depends on the individual’s circumstances. Every individual has different goals, risk tolerance, and time horizon, and the types of investment assets listed above cater to these different needs. So, what might be the best asset classes to invest in for one person, might not be the best for another person.
You can also hold investments in tax advantaged retirement accounts such as IRAs, although traditional IRAs are limited to traditional investments like stocks and bonds. It is possible to hold a wider range of alternative investments with greater growth potential through a self directed IRA.
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Selecting The Right Platform For Different Types Of Investments
There are a few key factors to consider when selecting the right platform for different types of investments. The first factor is the types of investment assets. Different platforms offer different types of investments, so it is important to select a platform that offers the type of investment you are interested in. Ensure you use a reputable company and avoid get rich quick schemes.
The second factor is the fees associated with the platform. Some platforms charge fees for trades, while others do not. It is important to compare the fees associated with each platform to find the most cost-effective option.
The third factor is the level of customer service offered by the platform. It is important to select a platform that offers excellent customer service in case you have any questions or need assistance with your account.
Find your favorite asset classes to invest in and the best online trading platforms at Supermoney.
Types Of Investment Assets Conclusion
There are many different types of investment assets available to help you grow your wealth. Each has its own advantages and disadvantages, so it’s important to do your research before deciding which ones are right for you.
The above list of 21 different types of investment assets provides a good mix of asset classes to invest in. Whatever level of investment experience, available capital and risk level you have, there are many different types of investments to make. This will allow you to build your own diversified portfolio made up of many of the different asset classes for investment.
Find your favorite asset classes to invest in and the best online trading platforms at Supermoney.
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