Asset Classes? Do I need to attend them?

When undertaking a financial planning review with our clients our financial planners often talk about different asset classes.

So what do they mean? Below is a brief overview of what these asset classes do. Some asset classes are better for income while others come into their own when you are looking for capital growth. Some would be seen as high risk while others would be low.

DEPOSITS.

Think of it as a savings account.  Like the one, you may have with a Bank or Building society. You deposit your money with them and in return, you are paid interest. It is seen as low-risk. If interest rates are very low, returns will be low too.

CORPORATE BONDS.

You lend money to a company for an agreed period of time. In return, you are paid a set interest rate. The main risk is if the company goes bankrupt without paying back the loan. Historically, bonds tend to be less volatile than shares and the returns are fairly predictable.

GOVERNMENT BONDS, also known as GILTS.

These are like corporate bonds, but instead of lending money to a company, you are lending to the government. This is generally low-risk because the government is unlikely to go bankrupt. Like corporate bonds, gilts are less volatile than shares and the chances of returns growing are generally better than with deposits.

COMPANY SHARES also known as EQUITIES.

Companies sell shares to raise money. In return, you are paid a share of their profits. This is known as a ‘dividend’. Shares are bought and sold on the stock market. The price changes based on how well the company is doing, what its prospects are or market sentiment. Shares are seen as a long-term investment as they can be too volatile for short-term investing. It’s also worth bearing in mind some overseas stock markets are more volatile than UK shares. In addition, currency exchange rates can affect them. With shares, you can get both income through the dividends as well as capital growth if the shares move up in value.

There are two main types of property funds.

DIRECT PROPERTY FUNDS.

With direct property funds, you are investing in a range of properties. These could be shopping centres, factories or offices. They may not be very liquid as you might not be able to cash in your investment when you want to. The property needs to sell quickly.  An additional downside is that the true value of the investment only becomes clear once a buyer agrees on a price.

PROPERTY SECURITY FUNDS.

With these, you are investing in property companies. These act like shares. The price of these funds can go up or down suddenly. The advantage compared to direct property funds is that you are more likely to be able to cash in your investment when you want to.

SPECIALIST.

These might include foreign exchange or commodities like grain, gold or oil. These are generally seen as high-risk investments.

How Anstee & Co can help you with asset classes.

Finally, many of our solutions are a mixture of these asset classes. Blending shares, cash and property. The aim is that if one asset class is not performing the others do well. That old saying of not “putting your eggs all in the same basket”. A case of spreading your risk.

We are a firm of Independent Financial Advisers (IFA’s). This means that the advice we offer is unbiased.

There are many factors to consider when investing and the process may seem complex and time-consuming. Also, our expert independent advisers will support you at every step and do most of the work for you.  Simply contact us and we can guide you from start to finish.

The initial meeting is at our cost, so why not contact us today. Our Head Office is  located at-

• Kettering, Northamptonshire

Additionally, our financial planners live and make use of rooms in-

• Bedford, Bedfordshire
• Market Harborough, Leicestershire
• Northampton, Wellingborough and Thrapston in Northamptonshire.

Also, we make full use of video conferencing facilities such as-

• Zoom
• Microsoft Teams
• Facetime

We can also arrange a conference telephone call. So, there is no need to visit an office as all work can be handled remotely. The choice is yours. Our expertise covers all aspects of financial planning including pensions, investments and mortgages.

If you have any thoughts on this article, “Asset classes. Do I need to attend them?”, then we would love to hear from you.

Finally, the information contained in this article is for information purposes only and does not constitute financial advice. Anstee & Co. is authorised and regulated by the Financial Conduct Authority (FCA).