Asset Classes are a building block to a good investment strategy. A proper understanding of the types of assets is important to make wise investment decisions. Watch this video to know how these two are related and the types of financial instruments.
What are asset classes?
This short video will give you an idea about asset classes:
https://www.youtube.com/watch?v=8oCaHULmUQ0
Asset class is a group of investment options that display the same characteristics. In some cases, specific characteristic of two asset classes may overlap. But no asset class can be a perfect substitute for another.
No asset class is perfect – each has its own pros and cons. It all hence boils down to your investment objective. For instance, the cash asset class is great for those who want to have easy access to liquid cash quickly. However, it cannot save you from inflation and the returns are lower than the other asset classes. On the other hand, fixed income instruments are like bonds which offers steady growth of principal and the returns over longer period tend to be more than the cash asset class. But on the flip side, some issuers may not give the committed amount of interest or even return the money when needed. Stocks and equities asset classes have the potential to give higher returns, is easy to liquidate and can protect you from inflation. However, one requires expertise to invest in them.
You can read more about the types of asset classes and their importance here:

https://www.franklintempletonindia.com/investor/distributor-zone/adviser-education/asset-allocation-and-systematic-investing

Some important points about asset classes are:
• They help in making the right investment choice
• Each asset class is unique and cannot be perfectly substituted
• No asset class is perfect
Some of the key asset classes are cash, bonds, gold, commodities etc.
Asset classes are wide and varied. A single one may not meet all your requirements. A combination of various asset class might be the right choice for you.

View more such videos in the playlist Franklin Templeton Academy:

https://www.youtube.com/playlist?list=PLpDLpRd877mRvP2fuzG7Bby1cwuLQ6i3W

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