One way to protect your investment capital is to have a diversified portfolio. Meaning, your funds are invested to several asset classes.
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However, as you are just beginning your financial journey, it is not an easy task to pick and choose which one to invest. If you ask any financial expert, most of the time their advise is to diversify.
This is not a wrong advise, there is just a slight problem with the execution. Instead of diversifying to other asset classes, most investors only diversify to other investment vehicles but is still under the same asset class.
The Different Kinds of Asset Classes
Paper Assets
- stocks
- bonds
- mutual funds
- stock options
- stock futures
- foreign exchange
- REITs
- ETFs
Commodities
- gold
- silver
- copper
It also covers food like:
- grains
- corn
- coffee
- sugar
Also raw materials like:
- oil
- gas
Cryptocurrencies is slowly being considered as a commodity.
Real Estate
It can be a land, building or any form that gives you income through rentals/leases.
Business
You can either invest in your own business or invest to someone else's business.
As you become more knowledgeable and skilled, aim for true diversification by branching to other asset classes. It is only in this way you can truly protect your capital and overtime grow your wealth.
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