There are four primary investment varieties, or asset classes, that you can pick from, each with different characteristics, hazards, and advantages.
Once you are acquainted with the different kinds of assets, you can start to think about putting together a mix of investments that will fit with your individual circumstances and risk tolerance level. Our experts on multifamily real estate passive income explain these different types of investments you might choose between.
These are more appropriate for long term investors who are willing and capable of withstanding market rises and falls over more extended periods of time.
Shares are deemed a growth investment as they can help increase the value of your original investment over the medium or long term.
If you hold shares, you may also acquire income from dividends, which are effectively a piece of a company's earnings paid out to its shareholders. Of course, the worth of shares may also drop below the price you pay for them. Prices can be volatile from day to day, and shares are typically best suited to long term investors, who are satisfied withstanding these rises and falls over time. Also known as equities, shares have historically provided higher returns than other investments. However, shares are deemed one of the riskiest kinds of investment, so buyers beware.
Property is also regarded as a growth investment because the cost of houses and other properties can increase substantially over a medium to long term period. However, much like shares, property can also decrease in value and bears the risk of losses. It is possible to finance directly by purchasing a property and also indirectly through a property investment fund.
These investments are more focused on always generating income rather than growth and are deemed lower risk than growth investments.
Cash investments include everyday bank accounts, high interest savings accounts, and term deposits. They generally carry the lowest potential returns of all the investment types but are a safe bet for anxious investors. While they present no chance of capital growth, they can produce regular income and can play an essential role in safeguarding wealth and lowering risk in an investment portfolio.
The best known variety of fixed interest investments are bonds, which are basically when governments or companies borrow money from investors and offer them a rate of interest in return.
Bonds are also considered to be a defensive investment because they typically offer lower potential returns and lower levels of risk than shares or property investments. They can also be sold fairly quickly, like cash, although it's necessary to note that they are not completely free of the risk of capital losses.
We hope this post has given you a better understanding of the four primary types of investments available to you. Contact us today to learn more about multifamily real estate passive income if you are interested in property investments. We are here to help you build wealth for your future.