http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in How Do You Choose Which Assets Classes to Invest In? You have enough money to start investing. But, before you consider how to start investing in the stock market, you want to get your financial house in order. Our article on that subject suggests that the first thing to do is pay off your credit cards and the second is to buy your own home. Once you have a rainy day fund in the bank for emergencies you want to consider investments. The stock market is a good choice but it not the only one. What other asset classes are there? Stocks, bonds, short term investments (cash), and real estate are the basic four. But, how do you choose which asset classes to invest in? Let’s look at each of the big four and then commodities (gold). How Do You Choose Which Assets Classes to Invest In: Stocks Stocks have two basic things going for them. Over the years the US stock market has outperformed real estate, bonds, and money in the bank. And, the stock market offers liquidity that real estate investments lack. You can buy a stock one day and sell it the next. Try doing that with a piece of real estate! So, why shouldn’t you put all of your investment capital in stocks? If you remember the 2008 stock market crash, the dot com crash, or the various other market crashes going back in time you can see that there can be risk in investing in stocks. There are ways to deal with that risk such as by choosing a range of stocks instead of just one or two and learning to assess intrinsic stock value as a guide to profitable investing. How Do You Choose Which Assets Classes to Invest In: Bonds We discussed treasury and corporate bonds in our article entitled how to invest without losing any money. US Treasury bills have maturities of a year or less. US Treasury notes have maturities from two to ten years. And, US Treasury bonds have maturities of ten to 30 years. Each of these investment vehicles is backed by the “full faith and credit” of the US government. The risk of loss of any of these if held to maturity is nil. How to invest without losing any money in US Treasuries is to hold them to maturity or only sell them at a profit. The same approach applies to AAA corporate bonds issued by Johnson & Johnson or Microsoft. These asset classes do not outperform the S & P 500 over the years but they do outperform a lot of individual stocks. If want you want is to keep your money safe, not lose any, and make a decent rate of interest along the way, bonds as an asset class are a good addition to any investment portfolio.

1. How Do You Choose Which Assets
Classes to Invest In?
By www.ProfitableInvestingTips.com

2. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
You have enough money to start investing.
But, before you consider how to start
investing in the stock market, you
want to get your financial house in order.

3. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
Our article on that subject suggests that the
first thing to do is pay off your credit cards
and the second is to buy your own home.

4. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
Once you have a rainy day fund in the bank
for emergencies you want to consider
investments.

5. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
The stock market is a good choice but it not
the only one.

6. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
What other asset classes are there? Stocks,
bonds, short term investments (cash), and
real estate are the basic four.

7. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
But, how do you choose which asset classes
to invest in?

8. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
Let’s look at each of the big four and then
commodities (gold).

9. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
How Do You Choose
Which Assets Classes to
Invest In: Stocks

10. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
Stocks have two basic things going for
them.

11. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
Over the years the US stock market has
outperformed real estate, bonds, and
money in the bank.

12. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
And, the stock market offers liquidity that
real estate investments lack.

13. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
You can buy a stock one day and sell it the
next. Try doing that with a piece of real
estate!

14. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
So, why shouldn’t you put all of your
investment capital in stocks?

15. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
If you remember the 2008 stock market
crash, the dot com crash, or the various
other market crashes going back in time
you can see that there can be risk in
investing in stocks.

16. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
There are ways to deal with that risk such
as by choosing a range of stocks instead of
just one or two and learning to
assess intrinsic stock value as a guide to
profitable investing.

17. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
How Do You Choose
Which Assets Classes to
Invest In: Bonds

18. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
We discussed treasury and corporate bonds
in our article entitled how to invest
without losing any money.

19. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
US Treasury bills have maturities of a year
or less.

20. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
US Treasury notes have maturities from
two to ten years.

21. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
And, US Treasury bonds have maturities
of ten to 30 years.

22. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
Each of these investment vehicles is backed
by the “full faith and credit” of the US
government.

23. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
The risk of loss of any of these if held to
maturity is nil.

24. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
How to invest without losing any money in
US Treasuries is to hold them to maturity
or only sell them at a profit.

25. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
The same approach applies to AAA
corporate bonds issued by Johnson &
Johnson or Microsoft.

26. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
These asset classes do not outperform the S
& P 500 over the years but they do
outperform a lot of individual stocks.

27. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
If want you want is to keep your money
safe, not lose any, and make a decent rate of
interest along the way, bonds as an asset
class are a good addition to any investment
portfolio.

28. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
How Do You Choose
Which Assets Classes to
Invest In: Cash and Short
Term Investment Vehicles

29. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
If you believe you will need your money
fairly soon, you do not want to tie it up in
stocks, long term bonds, or real estate.

30. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
Any of these asset classes may go into a
slump and that would mean that you lose
money when you take your cash.

31. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
A good way to get a little interest on your
money is to create a ladder of short term
bonds or even CD’s at your bank.

32. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
You will always have cash available when
needed.

33. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
This asset class does not outperform any of
the others but it is the most flexible.

34. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
There are a lot of smart investors who hold
cash when they do not trust which way
interest rates, the stock market, or real
estate prices are going.

35. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
How Do You Choose
Which Assets Classes to
Invest In: Real Estate

36. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
Your own home is the real estate
investment that you need to make first and
foremost.

37. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
Long term real estate investment is a skill
that needs to be developed over the years
and hopefully not by losing money along
the way.

38. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
If you want to take advantage of profits
from real estate and not sink all of your
money into a piece of property, consider
REITs which are real estate investment
trusts.

39. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
These are investments you can get into for
a reasonable amount of money and get a
good return.

40. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
And, you do not need to manage the
property yourself!

41. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
How Do You Choose
Which Assets Classes to
Invest In: Gold

42. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
Gold bugs think that sooner or later all
paper currencies will be worthless.

43. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
Thus, the only way to retain any value for
the future is to hold precious metals.

44. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
The problem with gold is that it does not
pay a rate of interest and its price goes up
and down.

45. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
If you want to have a little gold as a reserve,
just in case, there are to viable approaches.

46. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
One is to simply wait for the price of gold to
plummet and then buy.

47. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
The other is to use cost averaging. Buy the
same dollar amount of gold every month or
so.

48. http://profitableinvestingtips.com/bond-investing/how-do-you-choose-which-assets-classes-to-invest-in
Gold is a valid hedge against catastrophic
economic and social events but the S & P
500 has been a better choice over the years.