An asset class is a group of similar securities that share the same laws and risks and behave similarly.
Breakdown of the asset class types:
Main:
Equities
Fixed Income
Cash and cash equivalent
Debatable
Commodities
Real estate
Currencies
Futures
Cryptocurrencies
Equities can be described as stocks in simple terms. Equity represents a stake in the company, and the owners of those shares become shareholders. The value of equities is related closely to the amount of money that would be returned to the shareholders in the event of all the assets' liquidation. This asset class is characterized by high risk, and transactions should be well-informed.
The most common fixed income is bonds, which can be split into government and corporate bonds. Bonds are a kind of loan that works the other way: the organization "borrows" money from an individual and pays a certain fixed rate at maturity. It depends on the bond distributor, but bonds are generally pretty safe, and they could be a good first investment.
Securities in this category need to be easily convertible to cash. The essential futures are unrestricted access, liquidity, and low risk. This type is needed to make ongoing investments or serve as emergency funds.
Those classes can be categorized differently depending on the people who create categories, but they should be considered literate. Real estate, currencies and cryptocurrencies do not need further explanation in this paragraph, and they are self-explanatory.
Commodities are materials such as metals, oil, energy, or even agricultural products. The most prominent good that can be referenced here is certainly gold.
Futures are contracts to buy or sell any other financial asset. This is a risky strategy based on speculation, often involving leverage, intensifying risk because an investor can lose more money than the initial investment. However, the future can be useful for organizations in planning and budget security.
Asset classes combine and allocate a vast spectrum of existing goods to more abstract concepts that simplify communication and enable more descriptive announcements and descriptions.
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Like you or me, an individual who invests their money in the market.
The ultimate “middleman” in the world of finances.
A custodian is a person or institution whose role is to protect and care for something.
Imagine someone who wants to invest in the stock market but cannot individually invest in each company's stocks for various reasons—lack of time, knowledge, or resources. This is where ETFs come into play, offering investors a "basket" of diverse assets that can easily be bought and sold, like a single stock.
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