+

Blog

See all

There are different assets available on the market, characterized by lower or higher investment risk, including cash, debts, shares, real property, natural resources, hedge funds and alternative investments.

 

CASH

Cash is the simplest type of asset. Cash has no tendency to gain value, with the exception of cash issued by other countries (changes in the currency exchange rates). One of the most important things to keep in mind is that investing in cash is a long term investment, where the return (in the form of interest) could be lower than the rate of inflation. Over time, the inflation lowers the true value of any investment.

 

 DEBT

There are many forms of debt investments. These types of assets are typically held to receive income rather than to generate capital gains. They are usually classified according to the type of the borrower, the level of risk involved (how probable the repayment is), how the debt is secured, whether the debt can be exchanged into another asset, and how much accrued interest is there. The profit is calculated by dividing the due interest by the value of the debt.

 

The yield on the debt investments is directly related to the risk involved. The higher the sought income, the greater the risk. Public debt has different names in different countries – Gilts in Great Britain, Treasuries in the USA, JGBs in Japan, Bunds in Germany, OAT in France. Lower risk usually means a lower return, and government bond rates tend to be lower than the rates corporate debt. The debt securities which are issued by companies and then traded on the stock exchange are called corporate bonds.

 

 SHARES

Shares are issued by companies. Most companies are not listed on the stock exchange. When individuals invest in shares through institutions, they are called private capital. Companies that are public listed on the stock exchange must comply with a number of regulations, inform investors and audit their shares. Private companies, especially small ones, are not subject to t. A shareholder in a publicly traded company receives dividend pay – a portion of the company’s profits – and capital gains as the share price rises. Stock prices depend on supply and demand. Stock prices can be volatile and react to situations beyond the company’s control.

 

 REAL PROPERTIES

Investment properties such as residential premises, offices, commercial, industrial and logistics (warehouses) properties are treated separately in the market area and generate completely different rates of return in a given sector.

 

 NATURAL RESOURCES

Investing in natural resources – such as gold, silver, iron, oil or wood does not bring income. Profit comes in the form capital gain. The prices of goods can be volatile and unpredictable, so this is a high-risk investment.

 

HEDGE FUNDS

Hedge funds are able to invest in any asset, but they tend to invest in derivatives – financial contracts that can take many forms. Mostly they give the right to buy or sell assets at a fixed price in the future.

 

 ALTERNATIVE INVESTMENTS

There are many funds on the market that invest in assets as diverse as airplanes, reinsurance contracts, life insurance policies, solar and wind power, and infrastructure. The risks and benefits they offer vary a lot.