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There are a number of issues to consider when determining which asset classes to construct your investment portfolio with. Some of these include:

  • What level of investment return do you want and what investment risk are you willing to take to achieve this level of return?
  • How long will you be investing your money for?
  • What are your investment goals and objectives?

Click below to see a simplified analysis of the different Asset Classes. You should realise that within the different asset classes there are different quality investments. There are also different risk level assets within the same asset class.

Asset Classes Features What do I need to know?
Cash The capital is safe relative to other asset classes. You have immediate access to your funds. There is no protection from inflation. The returns are highly variable. Low returns are expected in the long term. Returns are fully taxable.
Fixed Interest Generally secure. Income is known. You know exactly how much you will be getting and when. Interest rates can vary and may not keep pace with inflation. You can’t cash it in easily in an emergency
Shares Growth above inflation in the long term. Growing income. Potential for tax benefits. Easily cashed in. Can Diversify internationally. Can reinvest via dividend plans. Stock market volatility could lead to losses if forced to sell. Market slumps can be prolonged. Companies can underperform or go out of business. Difficult for the direct investor to get sufficient diversification.
Property Capital value and income should rise with inflation. Potential for tax benefits. Rent is a stable form of income. Emotional security of ‘bricks and mortar’. You can’t cash it in easily in an emergency. Can’t divide the asset very easily. Can be easily destroyed (eg through fire). Possible problems with tenants. Capital concentrated in one single asset.

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