What can you invest in?
There are lots of different ways that you can grow your money over time. One of the most common ways is through investing.
When you invest your money, you can use it to buy different types of assets. An asset is anything that has monetary value. In investing, there are several different asset classes that you can choose from. And an asset class is basically a group of similar types of investments.
The 3 main asset classes are:
These are issued by governments or corporations as a way to raise money. You lend them money and in exchange you receive a fixed rate of interest over a set period of time. This is why they’re also known as “fixed income investments.” Once the set period is reached (known as maturity) you get back your original investment. Bonds are considered less risky than stocks or other asset classes.
Equities (also known as stocks and shares in companies)
When you own a stock, you own a share of a publicly traded company. This just means that the company is listed on an international stock exchange. The return you make will depend on how the company performs. You can earn money through capital gains or dividends. Capital gains is when the company becomes more valuable and the share price increases. Dividends are usually paid by larger sized companies – it’s a way for companies to distribute some of their profits as cash to their shareholders. Equities are considered more risky since there’s no guarantee of a company’s future success and you could lose some money.
These are tangible things, like property or gold. Real assets have physical value. Their value can go up or down, but you might need to sell the asset to get those returns.
Investing in assets is one of the best ways to grow your money for your future goals.