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the main asset classes for an investment portfolio: from equities to real estate

Home » blog » the main asset classes for an investment portfolio: from equities to real estate

There are several critical factors to consider for the assets in an investment portfolio: return, risk and liquidity. These factors have a direct impact on the effectiveness of an investment strategy. To put together a successful investment portfolio, investors not only need to know what asset classes exist, but also understand their dynamics on the global stage. in 2023, for example, the stock market was volatile and many were revising their strategies to reflect the new economic reality.

Equities: opportunities and risks

Equities are one of the most prevalent asset classes in an investment portfolio. in 2023, the US stock market continued to recover from the 2020 economic downturn and attracted new investors. equities offer opportunities for dividends and capital appreciation, but come with high risks due to price volatility. in 2021-2022, technology stocks (Tesla, Apple, Microsoft) showed growth of 25-30%, but in 2023, the same giants faced sharp corrections.

characteristics:

  1. returns: historically, equities have offered returns of 7-10% a year for long-term investments.
  2. equity risk is high, especially for smaller companies or stocks in fast-moving sectors. Meta stocks, for example, fell 60% in 2022, underlining their vulnerability
  3. liquidity: extremely high, as shares are traded on exchanges around the world

bonds: protection and stability

bonds are debt instruments that provide investors with a fixed income. in a rising interest rate environment in 2023, fixed-rate bonds have become less attractive, as rising interest rates reduce the price of bonds in the secondary market. in the long term, however, bonds remain a stable asset in an investment portfolio.

characteristics:

  1. yield: in 2023, 10-year US government bonds will yield between 3.5% and 4%, while lower-rated corporate bonds could exceed 8%.
  2. risk: depends on the issuer’s rating. Bonds of Apple or Microsoft, for example, are considered almost risk-free, while emerging market bonds can be riskier.
  3. liquidity: medium. although debt can be sold on the secondary market, liquidity depends on the rating and market conditions.

bonds are ideal for long-term investors looking for stable income with moderate risk.

funds: convenience and accessibility

mutual funds are a professionally managed pool of assets. in recent years, interest in index funds and ETFs has been particularly strong. 2023 S&P 500 ETFs have provided investors with returns of between 15% and 20%, which is particularly attractive given inflation and market volatility.

characteristics:

  1. performance: depends on the type of fund. for example, Vanguard’s 2023 S&P 500 ETF achieved returns of 17%, while more aggressive growth funds achieved returns of up to 30%.
  2. risk: medium. the funds spread risk by including a large number of assets in the portfolio.
  3. liquidity: high. the funds are traded on an exchange and can be bought and sold at any time. for example, the Vanguard Total Stock Market ETF can be bought intraday on the NYSE or NASDAQ.

an ideal option for those who do not want to manage their assets themselves but want access to a wide range of securities and diversification.

real estate: sustainability and long-term returns

real estate remains an important asset in an investment portfolio, especially against the backdrop of rising inflation and economic volatility. in 2023, the US real estate market saw prices continue to rise despite rising interest rates. the value of owner-occupied homes increased by 7-10%, while commercial property yields rose to 5-6% per annum.

real estate:

  1. returns: in 2023, residential property in major US cities, such as New York or Los Angeles, yielded 4-6%. commercial property in the centre of big cities could yield up to 7-9% a year.
  2. risks: low. Real estate is less sensitive to short-term market fluctuations, but can be affected by long-term economic downturns or changes in tax policy.
  3. liquidity: low. selling property takes time and can take months or even years. stable prices per square metre and possible increases in value keep this asset class attractive.

gold: a sustainable investment

in an environment of economic uncertainty and high inflation, the precious metal has seen its value rise by 12-15%, making it attractive to investors looking to avoid the risks of other assets.

characteristics:

  1. yield: gold does not offer regular income, but it can increase in value in times of crisis. in 2023, the gold price was around $2,000 per ounce, up 12% from 2022
  2. risk: low. the precious metal is a stable asset in the long term, but the price can fluctuate sharply in the short term, as in 2022, when the price fell 5% due to a sharp increase in dollar tightness
  3. liquidity: high. The metal can be sold quickly on global markets through platforms such as the London Metal Exchange or COMEX.

investing in gold remains a good way to diversify a portfolio, especially in times of financial crisis.

portfolio assets: conclusion

The right spread of assets in an investment portfolio ensures stability and high returns in different economic conditions. stocks, bonds, real estate, gold, equities: each category has its own characteristics and risks. To build a successful portfolio, it is important to take a holistic approach, including the right spread and selection of assets based on investment objectives and time horizon.

 

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How to become a successful investor: a formula that works

Buying stocks without understanding is not investing, but merely an attempt that almost always ends in failure. To understand how to become a successful investor, it is not enough to just open an account and buy what everyone is buying now. An investor differs from a speculator in thinking, strategy, and discipline.

The stock market has proven over 100 years: capital grows only for those who think systematically. The S&P 500 index has increased more than 200 times since 1928, but only long-term investing allows you to maximize this growth.

How to Become a Successful Investor from Scratch

Profitable investments start not with money, but with understanding goals and rules of the game. The main thing is not to guess the market, but to build a plan that works in any conditions.
Action algorithm:

  1. Understand the goal — term, amount, expected return, acceptable risk.
  2. Assess finances — monthly balance, debt level, a 6-month “cushion”.
  3. Choose a broker — with a license, insurance, low commissions.
  4. Create a portfolio — select assets by classes: stocks, bonds, gold, real estate.
  5. Distribute weights — 60/30/10 for medium risk, 80/15/5 — for aggressive.
  6. Monitor balance — review the portfolio once a quarter, revise when goals change.
  7. Do not panic — during downturns, maintain course, buy assets on a dip.

This approach demonstrates how to become a successful investor in the real economy. Investment strategies stop being theories when they are laid out with numbers and dates in a plan.

When and How to Start Investing

The beginning is not in choosing a broker, but in setting a goal. The goal determines the asset. Pension savings require one approach, capital for real estate purchase — another.

The mistake remains in believing in the “right moment”. In practice, regularity is more important. Even during market declines, averaging strategy reduces risks. Investments in stocks, started any day since 1990 with monthly contributions, in 90% of cases led to profit after 10 years.

The start is important not because of the entry point, but because of initiating the compound interest mechanism. The earlier the portfolio starts working, the higher the final return — by the 20th year of investing, the difference between starting at 25 and 35 years old can reach up to 150% of the final amount.

How to Overcome Fear of Investing and Become a Successful Investor

Uncertainty often arises from ignorance rather than risk. Financial illiteracy is the main enemy of an investor. Simple analysis shows: over the past 100 years, the US stock market has shown positive returns in 74% of years, even considering crises.

Understanding how to become a successful investor starts with studying the basics: assets, risk, liquidity, volatility. At the same time, strategy is more important than the tool.

Proper allocation is a shield against panic. A portfolio where stocks make up no more than 60%, and the rest is bonds and gold, loses less in a crisis and recovers faster.

What to Choose for a Stable and Profitable Portfolio

Forming a strategy is not about choosing a trendy direction, but a mathematical calculation. Real estate investments provide stability but limit liquidity. Trading investments are potentially high-yielding but require immersion and analysis.

Stocks provide a balance between risk and return. For example, investments in companies from the Nasdaq index averaged 11.6% annually over the last 15 years. But only with long-term holding. On a horizon of less than three years, the probability of loss almost doubles.

Portfolio formation depends on goals, but the structure always relies on the relationship between return and risk. Calculating the Sharpe ratio allows comparing instruments by efficiency: the higher the indicator, the better the return-to-risk ratio.

How to Preserve Capital in a Market Downturn

An investor’s composure is tested not in growth but in downturns. In 2008, the S&P 500 lost 38%, but recovered by 2012. Those who sold in 2008 recorded losses. Those who bought more doubled their capital.

The working method is rebalancing. When the share of stocks in the portfolio falls to 50% from the planned 60%, the investor buys the missing part. This restores the structure and simultaneously buys assets at a reduced price.

Asset management tools also work: gold, currency, money market funds. They reduce volatility. However, their share should not exceed 20% — low returns slow down capital growth.

How Often to Monitor an Investment Portfolio

Constant monitoring does not enhance results but increases anxiety. Checking portfolio indicators weekly leads to impulsive decisions. For a long-term strategy, quarterly analysis is sufficient.

The optimal frequency is four times a year. Significant changes accumulate over this period: dividend payments, seasonal volatility, economic reports. If the goal is how to become a successful investor, then discipline in monitoring is more important than frequency. An investor should act according to the plan, not mood.

Reevaluating asset composition is only allowed with significant deviations: if the share of stocks instead of 60% becomes 50% or 70%, adjustment is required. Minor deviations are corrected over time.

The Role of Analysis: Numbers Over Emotions

Financial analysis eliminates guesswork. Fundamental analysis evaluates company value, technical analysis assesses price behavior, macroanalysis examines the economic situation. But only combining the three approaches allows making informed decisions.

An investor using analysis evaluates risk as part of the strategy. For example, the beta coefficient shows stock volatility relative to the market. With a value above 1, the asset moves more than the index, with a value below — less.

Proper application of analysis is one of the main steps on the path to becoming a successful investor. Numbers help avoid emotional traps and invest rationally, relying on data.

Financial Crises as Growth Catalysts

A crisis breaks fragile strategies but strengthens resilient ones. In 2020, after the COVID-19 crash, the market recovered faster than ever — the S&P 500 reached a new peak within 6 months. Those who acted according to plan doubled their capital, while those who panicked recorded losses.

A savvy investor uses a crisis as an entry point. Future profit is formed during downturns. Investing for beginners should include simulations of crisis scenarios — this increases decision resilience and risk understanding.

When to Wait and When to Act in Investing

The stock market attracts with promises of quick profits. But a speculator loses more often than gains. 82% of traders incur losses in the first year of trading. This is a statistic, not speculation.

Investing in trading is possible only with a full understanding of the mechanics: volume, liquidity, market orders, technical indicators. A successful trader is not a gambler but a mathematician with a cool head. However, long-term results are shown by a passive approach. It is this approach that answers how to become a successful investor in unstable market conditions.

How to Choose an Investment Strategy

Developing a strategy is not about complicating but simplifying. A clear model saves time and reduces stress. Investment strategies include:

  1. Growth — focus on growth companies: Amazon, Nvidia, Tesla. High volatility but also high potential returns.
  2. Value — buying undervalued companies: General Motors, Intel. More stable returns, lower risk.
  3. Dividend — emphasis on income from payouts: Coca-Cola, Procter & Gamble. Suitable for reinvestment and pension goals.
  4. Indexing — passive tracking of indexes through ETFs: SPY, QQQ. Minimal fees, stable growth.

Investing consciously and profitably means choosing one strategy, adhering to it, adjusting based on facts, not emotions.

Conclusion

Becoming a successful investor means thinking strategically, not emotionally. It is a path based on clear goals, regularity, and the ability to combine returns with risk. It doesn’t matter when you start — what matters is how and why. An investor’s uniqueness lies in discipline and the ability to stick to a plan even in a crisis.

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How to build an investment portfolio to avoid money losses and nerves

Investing is the first step towards a stable financial future. Building an investment portfolio is the foundation. It requires in-depth knowledge of financial markets, analytical skills and experience. Let’s take a closer look at it in this article.

Why an investment portfolio is not an ordinary collection of assets

To really understand what an investment portfolio is, it is important to realise that it is not just a handful of stocks and bonds, but a carefully calibrated system. It is like a garden in which every flower and tree plays a role. Stocks are like bright, fast-growing flowers that can yield a bountiful harvest but need constant attention and care. Bonds, on the other hand, are like sturdy trees that provide a solid foundation, stable income and protect you from financial storms.

Consideration of objectives and level of risk

The approach requires consideration of many factors: risk level, time to reach financial goals and desired returns. The key is to ensure that the foundation not only generates returns but is also fit for purpose, whether that is buying a flat, raising children or retiring early.

How to build an investment portfolio and avoid beginner’s mistakes

First you lay the groundwork: what do you want to achieve and over what period of time? Then you start choosing assets. Novice investors should avoid overly complex and risky instruments.

Common mistakes and how to avoid them

Step by step: define your objectives, select the right assets (stocks, bonds, funds, gold, real estate, cryptocurrencies) and analyse the risks. It is important to remember that each plays a different role:

  1. Equities. They offer great upside potential, but can be very volatile.
  2. Bonds. A stable, less risky source of income that offers protection in times of market turbulence.
  3. Funds. Offer diversification as they cover many assets, reducing overall risk.
  4. Gold. Traditionally considered a “safe haven” during periods of economic instability, retains value and reduces risk.
  5. Real estate. Provides stable rental income and increases long-term capital growth.
  6. Cryptocurrencies. A risky but potentially profitable asset suitable for a small part of a portfolio to increase returns.

A common mistake is to bet on just one type. Analysis of historical data confirms that diversified portfolios show greater return stability than portfolios consisting of one or a few assets. This is because different asset classes have different correlations, which lowers the overall risk level of the portfolio. It is therefore important to create a balanced and sustainable investment portfolio by combining different asset classes to minimise risk.

Portfolio diversification: how to reduce risk and maximise returns

The secret to a healthy investment portfolio is diversification. Imagine a box of sweets, where each candy is a separate asset. If one is not so tasty, the rest will manage. With diversification, you can reduce risk by spreading it across different assets: stocks, bonds, real estate, gold and funds.

Examples and benefits of diversification

This is especially important for novice investors who are not yet prepared for high volatility. If stocks fall, bonds or real estate can help offset the losses. Diversification is a strategic safety cushion that helps maintain a stable base even in the most unpredictable economic conditions.

What assets should be included in an investment portfolio for a successful start from scratch?

For the novice investor, selecting assets can be akin to putting together a construction kit. You should include a variety of “buckets”: stocks for growth, bonds for stability, funds for simplicity and maybe a little real estate. By including different types, you can minimise risk and build a flexible investment portfolio that suits your financial goals and capabilities.

Real examples of return and risk

Statistics prove it:

  1. Equities can generate significant returns, but they are often subject to extreme fluctuations. For example, the S&P 500 index has a long-term average of around 10%, but some years can show both increases of 20% and decreases of 30%.
  2. Bonds, on the other hand, offer stable but moderate returns. For example, the return on Russian government bonds is about 7-8% per year, which reduces the overall volatility of the portfolio.
  3. Funds such as ETFs offer an easy way to invest, even with minimal investment, and have already proven their value. According to the Moscow Stock Exchange, Russian equity ETFs have grown 15% over the past 2 years, making them an attractive tool for beginners.
  4. And real estate, especially commercial property, is steadily rising in price and providing rental income. Investment in commercial real estate in Moscow, for example, can yield around 10% a year.
  5. Cryptocurrencies remain risky but potentially profitable assets. Bitcoin, for instance, rose 70% in 2021 and caught the attention of many investors. However, its high volatility requires a cautious approach and portfolio allocation based on risk.

It is best to start with conservative assets and gradually add riskier instruments to build a stable financial base.

How do you choose a broker to build your investment portfolio?

Choosing a broker to build an investment portfolio is an important step that is often underestimated. The main criteria are licensing, commission, ease of use of the platform and availability of research. Imagine the broker is a guide in the investment world. If the guide does not know the way or offers exorbitant prices for services, the journey is unlikely to be pleasant.

Platforms and their features

A licence ensures the safety of your funds and low commissions help you keep your profits. A convenient platform makes investing easy and accessible, even for beginners. Examples of such platforms include Tinkoff Investments, SberInvestor and VTB My Investments. Some brokers offer detailed analysis and training, especially useful for beginners.

Balancing your investment portfolio: what you need to know and do regularly

Balancing your investment portfolio is like maintaining your car: regular maintenance ensures it doesn’t let you down at a key moment. Core assets change in value over time and the original structure may be altered.

How to balance in practice

If stocks rise faster than bonds, the investment portfolio becomes riskier than expected. To avoid this, regularly review the asset allocation and bring it back to the target level. For example, if equities have risen and now hold a larger share, sell some of it and invest the money in more stable assets, such as bonds. This helps maintain an optimal level of risk and keep your investment strategy in line with your financial goals.

It’s time to take action: start your journey to financial freedom

Regardless of your age and financial situation, you can always find the right strategy and start investing now. A retiree investment portfolio can include conservative instruments that allow you to preserve your savings and receive a stable income. The important thing is to take the first step and then follow the plan with confidence. Financial freedom starts with a small but steady effort.

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