Investing 101 (Part 3)

So we know about cash, bonds and equities. Let's have a look at the following three asset classes.

4. Property or as some people like to call it, real estate, is the asset class of the tycoon. When I write that my mind immediately goes to Donald Trump who would have to be one more famous property guys in the world if not the most famous. When you look at very rich people's portfolios you would see that a great deal of it is in property. Remember when you invest in property you don't necessarily have to invest in the actual property. You can get exposure to property in funds and the like. So if you don't like fixing toilets at 3am on a cold wintry Tuesday morning then that might be the way to go for you.

5. Commodities are your raw materials. These are things like oil, wheat, even currency is a commodity. Basically anything that can be bought and sold on an exchange. Commodities can be very volatile and are considered a nil sum game. This is where if you are making money through commodities then someone else is losing it.

6. Collectibles are just that, things that you collect that if sold could make you a great deal of money. Examples are paintings are considered collectibles. Your huge wine cellar could be considered as a collectible. What about your collection of vintage cars? Of course. So, if you have a Rembrandt hanging on your wall then you could finance your (very good) retirement on that but you would need a lot of knowledge for that.

Finally I must talk about Alternative Investment Strategies. These are things such as hedge funds. Some people consider it a asset class in itself but in theory it is another way of managing your money.

We have gone through the different asset classes. Next time let's  see how it all fits together.