Asset Classes

Asset Classes can typically be defined as a group of securities that behave similarly within the marketplace and possess similar characteristics. The three primary Asset Classes include stocks, bonds, and cash equivalents. Although many people think of financial assets as being CDs, stocks, and bonds, an overwhelming part of the general public fails to think of a person’s home or additional land as being an asset. In truth, this type of asset can prove to be even more valuable than other traditional assets in some cases. There are many things about real estate assets that differ from stocks and bonds. For example, the value of a home or land typically reflects the overall state of the economy- fluctuating in accordance to local market conditions. For this reason, it is important that varied Asset Classes cover the need for diversification in any investor’s portfolio. The inclusion of real estate assets as well as the more traditional types of assets such as stocks, bonds and CDs, will increase the potential for higher returns and decrease the risk of loss.