What asset classes are tradable?

As a rule, a distinction is made between four asset classes:

•     Shares in a company, i.e. equities
•     Interest-bearing investments such as bonds or annuities
•     Real estate (for example, real estate funds)
•     Alternative investments

In addition, there are the asset classes liquidity, items with collector's value or commodities.

Shares

The first important asset class is shares. Anyone who buys shares automatically becomes a co-owner of the company. When comparing individual asset classes, it becomes clear that shares definitely promise the highest returns in download Exness apps. However, more risk must be reckoned with in this form of investment, because the risk of fluctuation in value can definitely be in the medium or even high range and the share price can rise or fall sharply overnight. Of course, this also depends on how much capital you want to invest in which shares. It is advisable to invest the available capital in different shares so that one is not too much affected by individual price fluctuations.

Bonds/annuities

Bonds are fixed-interest securities. This means that you buy bonds issued by a company or even a state, with which they obtain capital. This means that the company or the state is your debtor and is obliged to pay back your capital with interest. This means that you receive a fixed amount on a regular basis. Bonds thus offer the advantages of stable returns, predictability and low risk. If you want to minimise risk, you can buy government bonds with a high credit rating and a short maturity. However, bonds yield lower amounts than, for example, company shares. The yield is about 0.5 percent.

Real estate

Real estate is another asset class. Here, either a direct purchase comes into question, but you can also invest in real estate funds, in real estate shares or in crowdinvesting. The money invested cannot usually be converted into cash in the short term, so liquidity is only limited. An investment is designed for the medium to long term, and the risk of fluctuations in value is in the medium range.

Alternative investments

These include commodities, crowd investments, hedge funds or private equity and are hardly suitable for beginners. Although they harbour a high return potential, this is offset by a high risk of fluctuations in value and total losses. You should therefore only opt for such investments if you are familiar with the subject matter and already have more experience with investments.

Money market instruments

The asset class of liquidity or money market instruments primarily includes overnight money and time deposits. These so-called demand deposits are considered stable in value; there are no fluctuations and thus no risks.  Overnight deposits are available daily, time deposits usually only at the end of the agreed period. Bank products are considered safe investments; they are protected against loss in the event of insolvency by the banks' deposit insurance.