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What is an Asset Class?
Property, stocks, crypto… There are so many options, but which is best? First of all, let’s get the terminology right. Different investment categories are called “asset classes”. Each asset class is distinctly different in its inner workings and risk/return characteristics.
Before we break it down: The full 10-minute episode is live on YouTube! We aim to educate, inform, and entertain. Check it out here:
Asset Classes Breakdown
💵Cash
Cash = money. This includes bank transactional accounts, savings accounts, fixed deposits, call accounts, and cash in your pocket. Cash offers returns in the form of interest income.
🏦Bonds
When you go to the bank to borrow money – it’s called your “bond” and you pay interest on it. However, you can also invest in a bond where you are the counterparty, loaning your money to an institution and earning interest.
🏠Property
Property is simple: It’s got walls and a roof. The main categories of property include residential, commercial, and industrial. If you’re looking for passive income, property is the place to be. It also offers capital gains when the value of the property increases over time.
🌽Commodities
Commodities include metals (e.g., gold, silver, platinum), Agriculture (e.g., wheat, sugar, corn), and energy (e.g., oil, natural gas). Commodities are very cyclical, and can offer investors some proper upside if they manage to buy low and sell high.
📈Stocks
Sasol, Nvidia, Microsoft, Apple, Naspers, Sibanye, Glencore, Sanlam, MTN… You name it! When you invest in stocks, you own a part of a company. Stocks offer value in the form of dividends (when companies pay out a portion of their profits to shareholders), and also capital gain when the underlying business grows over time
🔐Crypto
Crypto is the new kid on the block. Bitcoin is still by far the biggest, which at the moment has both properties of digital gold, as well as a standalone digital global currency. There are various ways to generate returns in crypto, but the main money spinner remains capital gain.
Asset classes and their payoffs
Risk-Return Spectrum
Which one is best? It’s a difficult question to answer, because each asset class has different risk-return characteristics. The higher the risk, the higher the return.
What is Risk?
Risk in investments is volatility. The higher the “risk”, the more frequent and significant the ups and downs.
Risk-return spectrum
Which one is the Best?
Typically we work with stocks as the basis, and pair it with other asset classes depending on the investor’s specific circumstances (not financial advice).
For example, if you’re young and ambitious, we pair stocks with crypto. If you’re close to retirement, we pair stocks with cash and bonds. What is ultimately the best? This one:
Episodes coming your way 🎬
So, what are we covering? Well, depends on who’s asking (literally!). Our aim is simple: Ask your questions, and we’ll cover them as best we can: to inform, educate, and entertain.
Season1 Topics |
|---|
1. What is a TFSA and how can I use it to my advantage? |
2. Can you explain the different types of investments? |
3. I hear people are making money with Arbitrage. What is it? |
4. Debt: Is it good or bad? |
5. Life insurance - should I get it and why? |
6. How big of a deal is compound interest? |
7. Where should I invest my money? |
8. Should I go the DIY route or use a financial advisor? |
Who are we?😎
 The Knowledge Chest | Paul holds an Honours degree in Financial Analysis from Stellenbosch University. With a career spanning investing, accounting, and education, Paul is committed to becoming the best financial planner in South Africa. Despite his many accolades, Paul insists that his greatest achievement is that he is dating a yoga teacher. |
 The Anchor | Ingrid holds a BA Honours in Journalism from Stellenbosch University. She is a self-diagnosed workaholic, excelling in various roles such as marketing, publicity, social media, and strategic partnerships. Ingrid's commitment to promoting wellness and balance extends beyond her professional endeavours, as she is also an avid yoga teacher. |
 The Magic Maker | Alwin holds a BCom in Business Management from Stellenbosch University. Alwin has a unique ability to make things happen - if you need something done, he’s your man! Alwin currently works in the alumni office at the university, connecting past and present Maties and ensuring a brighter future for the youth. |
Connect with us📲
Feel free to reach out if you want to chat about finance (or even just chat!). We’re keen to get to know the community.
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