Investment term of the day: asset class

An asset class is a group of investments that have similar characteristics and are subject to similar laws and regulations.

The three main asset classes are equity securities or stocks, fixed-income securities or bonds, and cash equivalents. Some analysts will also include commodities such as real estate. These classes can also be broken down further, for example by industry.

Investors should include a variety of asset classes in order to maintain a diverse portfolio and as a result decrease risk.

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