Saturday, 30 January 2010

The 4 major asset classes: the building blocks of any investment plan

Any serious investor should have a basic knowledge of the 4 major asset classes and the risk inherent in each:
  • Cash - low risk  (For Savings and Protection)
  • Bonds - moderate risk (For Income)
  • Property - moderate to high risk (For Growth and Income)
  • Equities - high risk (For Growth)
Remember this fundamental rule:

The bigger the risk you take, the greater the possible reward or return (growth on capital) you can expect.

The safer your investment and the smaller the risk you take, the smaller the possibility of a great return.

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