What assets do you need?

Assets come in all shapes and sizes. But what are they, what assets do you need and what works best when you are planning for different stages of your life and later retirement?

First, in case you are wondering, what exactly are assets?

It’s important to understand financial industry jargon. This can help decision making and achieving peace of mind when planning investments to fund your future lifestyle.

Put simply, an asset class is a group of similar investments. They are bundled together and given a label because they will usually achieve the same objectives.

There are a number of different asset classes, or types of investment assets. Getting the right mix of assets helps you achieve a rounded portfolio that will hopefully give you the results you need over time.

Each asset class has different levels of risk for investors.

Spreading assets helps reduce the impact of any poorly performing sector, economic region or company that forms part of your investment portfolio.

Traditional asset classes

Most definitions for ‘traditional assets’ include cash, equities or shares and bonds.

Let’s start with CASH. This could, quite literally, mean cash under the bed. However, we all know that’s not a sensible way to hold an asset!

Cash accounts are classed as a traditional assets. They usually form part of an overall investment strategy.

For starters, cash is liquid. This means you can access it easily. However, you only earn small amounts of interest at the bank or building society. There is a very low risk for the investor providing that the total saved is modest.

Moreover, being able to access ‘cash’ could help solve a short-term crisis. It gives you flexibility to invest in more lucrative opportunities when they became available.

The value of assets can go up and down

BONDS or fixed-interest investments provide a regular, fixed income over a set period of time. These can be with private investment companies, or even be government backed.

However, investors should always be aware that the value of these assets come with greater risk and their value can go up or down.

The classic investment saying that you should “always invest for the longer term” is sensible.

STOCKS, SHARES or EQUITIES are issued by publicly-traded companies that can be bought and sold on stock exchanges.

When market conditions are favourable, you can potentially profit from shares through a rise in the share price of a company. Also, you receive dividend payments if profits are distributed.

Like most investments, you risk losing your investment if the stock you own performs badly.

What other assets are there?

In recent years there has been a shift in thinking when it comes to assets. Owning and earning income from one or more properties has gained popularity.

Investing in PROPERTY could, quite simply, mean owning your own home and watching the value grow. Usually, however, a stake in one or more commercial properties will form the basis of an investment portfolio where property assets are involved.

This could be industrial units, office blocks, warehouses, or even shops. These are usually owned as part of a shared investment fund.

All that glitters is not gold

In addition to cash, stocks and property, commodities such as OIL, GOLD and foreign CURRENCY can be classed as assets.

Even ART and antiques fall into this category. They can, like other investments, appreciate in value – as well as decreasing!

In fact, because the value of such assets can hinge on opinion, trends and even fashions, they are seen as higher risk.

One final asset class can be filed under a sub-category of cash – CRYPTO currencies. They are new to the market. These digital currencies have fluctuated wildly in value. Few ‘experts’ know whether they will form part of the financial landscape in the long run.

For now, the likes of ‘Bitcoin’ are treated with caution. Most investors look to more traditional assets to build their investment portfolios.

Understanding how assets can work for you

How you make the best use of a range of assets can be complex. There are many things that can impact values, affect availability and shift confidence associated with investments.

Of course, what you hope to achieve over your lifetime should also shape your investment objectives and influence what assets you hold.

Do you need to access them at short notice, do you want good growth or do you seek steady increases in value?

Logic Wealth Planning deals with these issues every day for clients with a range of different requirements.

Getting independent financial advice is always a good starting point. That’s what we’re here for.

If you’d like to start the conversation about investing in one or more different assets, give us a call. We make the process easy to understand and take things at a pace you are comfortable with.

Contact Logic Wealth Planning on 0808 1234 321 or email info@logic-wp.com to arrange no obligation appointment.