1. An asset class groups investments with similar economic behaviour
Equity represents ownership in businesses. Bonds represent lending. Cash is liquid purchasing power. Gold is a commodity/store-of-value asset. Real estate is physical property.
Tip: Classify by economic role, not app category.
2. Each asset earns return differently
Equity grows through business profits and valuation, bonds through contracted cash flows and yields, property through rent and appreciation, and gold mainly through price movement.
Tip: Different return engines create different risks.
3. Asset classes react differently to the same event
Interest-rate changes, inflation, recessions and currency moves can help one asset and hurt another.
Tip: This is why diversification can work.
4. A portfolio is a combination of asset classes
The question is not only which single investment is best, but what mix gives the goal enough growth, stability and liquidity.
Tip: Asset allocation comes before product shopping.
5. Quick check
A bond is primarily what kind of economic exposure?
Answer: B - A bond generally represents lending to an issuer under defined terms.