Glossary

An asset class refers to a group of investments that share similar characteristics, behave similarly in the market, and are subject to the same laws and regulations.

The main asset classes are stocks, bonds, commodities, cash, and real estate. Investors often diversify their portfolios across different asset classes to manage risk and optimise returns.

For example, a balanced portfolio might include stocks for growth potential 📈, bonds for income and stability, real estate for long-term appreciation 🏠, and cash for liquidity and safety.

Fun fact: Some investors also consider alternative investments like collectibles, and cryptocurrencies 💎 as separate asset classes, although these often come with higher risks and different market dynamics compared to traditional asset classes.