You can choose from four primary investment categories, or asset classes, each with its own set of characteristics, risks, and rewards.
You may start piecing together a combination that fits your unique circumstances and risk tolerance once you’ve been familiar with the various sorts of assets.
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Growth Investments
Long-term investors who are willing and able to ride out market ups and downs might consider these.
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Shares
Shares are a type of growth investment since they may help you increase the value of your original investment over time.
Dividends, which are basically a percentage of a company’s earnings paid out to its shareholders, may be received if you own shares.
The value of your shares may decrease below the price at which you purchased them. Prices can fluctuate significantly from day to day, thus shares are best suited to long-term investors who are willing to ride out the ups and downs.
Shares, often known as equities, have traditionally produced better returns than other assets. However, shares are considered one of the riskiest kinds of investing.
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Property
Because the price of houses and other assets may rise significantly over a medium to long term timeframe, property is also called a growth investment.
Property, like stocks, can depreciate in value and expose investors to losses.You can invest directly by purchasing a home, or indirectly through a property investment fund.
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Defensive Investments
These are less risky than growth investments since they are more focused on producing steady income rather than growth.
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Cash
Regular bank accounts, high-interest savings accounts, and term deposits are all examples of cash investments. They usually have the smallest potential returns of any investment kind.
While they do not have the potential for capital development, they can provide monthly income and can help safeguard wealth and reduce risk in an investment portfolio.
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Fixed Interest
Bonds are the most well-known fixed-interest investments, which essentially involve governments or corporations borrowing money from investors and repaying it with interest.
This is also called defensive investment, as they do not only provide lower return but lower levels of risk than stocks or real estate.
You may also sell them very rapidly, much like cash, albeit there is a danger of financial loss.
