Page 36 - Banking Finance July 2024

ARTICLE

class. Very few people were sitting on cash to utilise the
opportunity to do the bottom fishing.
4. Real Estate: Real estate: Real estate investments can
include physical property, such as a house or
commercial building, or investments in real estate
investment trusts (REITs) or real estate mutual funds.
Real estate can offer a steady income stream and long-
term appreciation, but it also comes with risks such as
market fluctuations and maintenance costs.
5. Commodities: Commodities are physical goods such as
oil, gold, or wheat, that can be traded on commodity
exchanges. They can be a hedge against inflation and
market volatility, but they can also be subject to supply a wider range of investment opportunities and the potential
and demand fluctuations. for higher returns. However, these investments also come
with higher risks and may require more specialized
Understanding asset classes is essential for investors to make knowledge and expertise to invest effectively. It is important
informed investment decisions and build a well-diversified for investors to carefully consider their investment goals and
portfolio that aligns with their investment objectives and risk risk tolerance before investing in alternative asset classes.
tolerance. By allocating their investments across different
asset classes, investors can reduce their overall portfolio risk Asset Class and Investing Strategy
and increase their chances of achieving their long-term Asset class and investing strategy are two important
financial goals. concepts in the world of investing. An asset class refers to a
group of investments that share similar characteristics, such
Alternative Asset Classes as risk, return, and correlation with other asset classes.
Alternative asset classes refer to investment opportunities
that fall outside of the traditional investment categories of An investing strategy, on the other hand, refers to a specific
stocks, bonds, and cash. These asset classes can include a approach to investing in one or more asset classes. Different
wide range of investment opportunities, such as private investing strategies are designed to achieve different goals,
equity, real estate, commodities, hedge funds, and more. such as maximizing returns, minimizing risk, or balancing
these two objectives.
Investors may choose to invest in alternative asset classes
for a variety of reasons. One of the main reasons is to The choice of asset classes and investing strategy is critical
diversify their portfolio and reduce risk. Alternative assets for investors, as it can greatly affect their returns and risk
may have different return and risk characteristics than exposure. For example, an investor who is primarily focused
traditional investments, which can help balance out a on generating income may choose to invest in bonds and
portfolio and reduce overall risk. dividend-paying stocks, while an investor with a higher risk
tolerance may choose to invest in growth stocks or
Another reason investor may choose to invest in alternative alternative assets such as private equity or venture capital.
asset classes is to seek higher returns. Some alternative
investments, such as private equity and hedge funds, may We need to be financially disciplined, no matter which "Asset
have the potential to generate higher returns than Class" we invest in. Two things to always keep in mind.
traditional investments. However, these investments also Percentage growth target
come with higher risks and fees. Time horizon

Overall, alternative asset classes can provide investors with Whichever meets first we need to strictly take the money

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