What Are Investment Assets?

Investment assets are things you can buy with the expectation that they will generate income or increase in value over time. They form the building blocks of investment funds, and can be grouped into different categories – commonly referred to as asset classes. Each asset class behaves differently, and carries its own level of risk and potential reward.

It’s good practice to spread your money over different asset classes, to diversify and balance risk. Investment funds can do this for you. Depending on the type of fund, they may hold a mix of several asset classes.

Sometimes referred to as equities, these represent ownership in a company. When you buy stocks and shares, you become a part-owner and can benefit if the company does well. Over time, stocks and shares can grow in value and may also pay dividends (a form of income). They tend to fluctuate in price, so they’re best suited for long-term investors who can handle ups and downs.

Bonds are essentially loans you give to governments or companies. In return, you receive regular interest payments and get your money back at the end of an agreed term. They’re generally more stable than stocks and shares, and are often used to provide steady income or reduce risk in a portfolio.

Investing in commercial property means buying buildings or land, either directly or through investment funds. Commercial property can earn rental income and may rise in value over time.

Cash includes savings accounts and short-term deposits. These are low-risk and easy to access, making them useful for emergencies or short-term goals. However, returns can be on the lower side – at least when compared to the potential of other asset classes. Inflation impacts money and investments as the real value of returns can be eroded over time.

Some investors look beyond traditional options, to alternative assets like commodities, such as gold. These could offer higher returns or diversification, but they often come with more complexity and risk.