This website uses cookies to ensure you get the best experience. Cookies Policy.

Investing
17 May 2019 6 min read

Something for everyone: different asset class for each risk appetite

Investing

Something for everyone: different asset class for each risk appetite

Fri May 2019 6 min read
article-img

Thinking about suitable asset classes? Consider your investment goals, time frame and risk tolerance. Before investing your hard-earned money, you need to know the pros and cons of investing in different asset classes. Let’s explore some potential asset classes!

Equities

Are you a risk taker? Do you enjoy analysing businesses and identifying those with the greatest growth potential? If this sounds like you, perhaps investing in equities is the way to go. When you invest in equities, it means that you own a part of the company and you expect its share price to increase in the long run. You can generate income via dividend payouts and/or capital appreciation. However, you can also lose money if your equities fall in value. The large potential reward comes with high risk. Not feeling a high-risk product like equities? Let’s look at something less risky – bonds!

Bonds

Bonds are debt securities that pay a fixed rate of return in the form of interest payments. When you invest in bonds, you are basically lending your money to the issuer. Usually when you decide to buy bonds, you trust that the issuer is able to pay back the amount together with interest. Does this mean you will never lose money? Not quite. Bond investors can lose their capital if the issuer goes bankrupt. However, bondholders are entitled to being paid ahead of equity investors, making it a safer option.

Cash, or cash equivalents

Are you concerned about locking up your capital for too long? If this is you, perhaps investing in cash or its equivalents can be a great idea. They generally have an investment period of 1 year or less. The main advantage of investing in this asset class is its liquidity. Liquidity refers to how easily an investor is able cash out his investments without losing significant value. If you are investing in favor of cash flow, this investment vehicle could really work for you!

Alternatives

Are you bored of traditional assets and looking to explore non-conventional products? Check out alternatives such as structured products and private equities to spice up your portfolio. Traditionally, only institutional and HNWIs get involved in these products as they often require a large minimum investment. Things are different today. There are many available options for investors with minimum investment amount as low as $1 USD. Concerned about locking up your capital for a long period of time? Rest assured, there are products with tenures as short as 3 months.

However, you need to be aware of the risks involved before investing in alternatives. These products generally have greater market risks since there is no guarantee the investments will make profits. In addition, your investment capital is usually locked in during the investment period, leading to liquidity risks.

We hope this article helps you to take your first step to educate yourself on learning to invest and how to grow your capital. There is an asset class for different risk appetites. Start investing early and you’ll thank yourself in the future!

Latest Insights

Investing Capital preservation

Recently, stock markets have been highly volatile due to the escalating COVID-19 outbreak and plummeting oil prices…

LU Global News LU Global wins 2020 Best of the Best Awards

For the second year running Lu International has won awards from the coveted Asia Asset Management…

Fintech FinTech – a billion-dollar industry

Everyone knows fintech is a billion-dollar industry but what you might not know, is there are no signs of this slowing!

Investing Capital preservation

Recently, stock markets have been highly volatile due to the escalating COVID-19 outbreak and plummeting oil prices…

LU Global News LU Global wins 2020 Best of the Best Awards

For the second year running Lu International has won awards from the coveted Asia Asset Management…

Investing Capital preservation

Recently, stock markets have been highly volatile due to the escalating COVID-19 outbreak and plummeting oil prices…

LU Global News LU Global wins 2020 Best of the Best Awards

For the second year running Lu International has won awards from the coveted Asia Asset Management…

Explore More
Explore More