Thursday, December 26, 2013

Asset Classes in India

The world of investing may sound like a jungle or another world to a new person entering this field with so many financial terms and products and features. But, at the most basic level there are only as many as 5 different asset classes to invest in. They are:
1. Equity
2. Fixed Deposits/Bonds
3. Gold
4. Real Estate
5. Exotics (Futures and Derivatives on stocks, commodities, currencies and Alternative investments like Wine, Art, etc.)

The products which we hear can all be classified into one of these 5 categories or are a combination of these 5 categories. The marketing departments in financial firms put in a lot of effort to create more combinations of these existing asset classes and sell them as a new differentiated product suited for your need. Stripping them out of the unnecessary jargons, you will essentially flesh out these 5 categories.
Further, if you remove all the cacophony of the noise produced by these marketing, you have to just think and concentrate on 4 key dimensions of investing. These are mentioned in the post here:

So, dont let fear of the unknown get the better of you when you are discussing or buying a financial product. Just ask them the questions on basics and force their hand to reveal the truth.

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