An asset class is a category of investments that have a similar behavior, risk, and return potential. The most popular asset classes are stocks and bonds.
What is an asset class?
- An asset class is a category of similar investments.
- Different asset classes have different risk and return profiles.
- Common examples are stocks, bonds, and commodities.
There are a variety of asset classes or types of investments. With their high-risk and high-return profile, stocks are good investments for accumulating wealth over a long period of time. Bonds’ low risk and returns are great at reducing a portfolio’s risk, especially if an investor is close to achieving their savings goals. Other asset classes like real estate, private equity, and commodities can offer additional benefits but come with their own risks.