Different Asset Classes available for Investments

Hello Friends,

I hope all of you are enjoying the current Bull Run :-) . So, what do you think? Where the market is heading? towards new Highs or for Correction?
Hey, I don’t know about this and please don’t ask me about it, because it is the duty of so called experts on Business Channels. ;-)
But what I know is how to make you Knowledgeable and Financially Literate, because it is my promise that has to be fulfilled. So this time I will be sharing the Knowledge about Different asset classes available for investments and investment options available under them.

Different Asset Classes:

1. Equity
2. Debt
3. Real Estate
4. Gold
5. Liquid



1.Equity Asset Class:

Equity asset class investments refer to buying and holding of shares on a stock market by Investors. They anticipate income from Dividends and Capital Gains as the value of the shares rises. If you are getting a return of 15% from Equity investments consistently, then you are meeting the objective behind it.
Following are the instruments available in the market as Equity Investment Options:
• Equity Shares:
Investing directly in stocks.
• Equity Mutual Funds:
Pooled Investment vehicle. E.g. Diversified Equity Mutual Funds, Balanced Fund, Sector Fund, etc…



2.Debt Asset Class:

Debt Asset class investments refer to buying fixed income securities. The main objective behind debt investment is protection of invested capital. This investment option is suited for conservative investor, who does not want to take any kind of risk. On an average a good debt instrument can give you 7.5 % + returns over a longer term horizon though these rates change as per RBI Policies.
Following are the instruments available in the market under Debt asset class:
• Fixed Deposits:
You people know it better than me :-)
• PPF and PF:
This also, you people know better than me. :-)
• Post Deposit:
Visit a post office and explore :-(
• Bond/Income Fund:
These funds invest in commercial papers from companies. These are debt mutual funds
• Gilt Fund:
Gilt Funds invest in Government securities. These are debt mutual funds

3.Real Estate:

Definition of Real Estate Investment (According to Invespedia)
Real estate that generates income or is otherwise intended for investment purposes rather than as a primary residence. It is common for investors to own multiple pieces of real estate, one of which serves as a primary residence, while the others are used to generate rental income and profits through price appreciation.
Common examples of investment properties are apartment buildings and rental houses, in which the owners do not live in the residential units, but use them to generate ongoing rental income from tenants. Those who invest in real estate also expect to generate capital gains as property values increase over time.
Expected rate of returns for real estate will differ from city to city.
Some Real Estate Investment Options:

• Real Estate Mutual Funds
• Real Estate Investment Trusts (REIT)
• Physical Real Estate

4.Gold:
One day I was discussing on phone regarding stock market. After the discussion my Mom said “ Don’t gamble in stock market, if you want to double your money then go to P N Gadgil ( One of the biggest jeweler in Pune) and buy some Gold. There you will earn returns.
Hey! Nothing that she is an expert in metal market, but that is the value of Gold in India. I know Indians don’t give direction to Gold Prices but still India is one the highest consumption market for GOLD. Gold is a finite asset, effectively its demand will increase and supply will decrease. So, this asset has only one direction in long term and that is towards North. It is also considered as Real Asset in your portfolio. Expected Rate of returns form Gold = 12% pa

Some Gold Asset Investment Options:
• Physical Gold
• Gold ETF

5.Liquid:

Cash in hand or balance in your savings account can be considered as liquid. Liquid means readily available to spend or invest or for any purpose. Liquid asset class has its own advantage and importance also. Expected returns on Liquid are very less. Liquid Mutual Funds are also available in the market which will give you returns of about 4 to 5%.
Some Liquid Asset class Options:
• Savings Account
• Cash :-)
• Liquid Fund

In the next blog, we will discuss about Importance of Asset Allocation in Portfolio Management. So follow it……..
Happy following,
Regards,
Parimal.