What is an asset?
An asset is something that can either be sold or held onto for an intended future benefit. An asset class is a category of similar financial assets.
Asset classes can include cash, bonds, alternatives, property, infrastructure and shares (or equities).
Each asset class has its own:
- Risk profile and
- Investment return characteristics
To help you work out what type of investor you are and the type of asset classes you should invest in, use our Risk Profile calculator consider talking to a Statewide Super financial planner for more personalised advice that’s tailored to your needs.
Cash includes cash deposits, term deposits and bank bills. Cash offers the lowest risk of any asset class with steady returns generally in line with the official cash rate set by the Reserve Bank of Australia. Cash is designed for investment over the short term with a low level of potential return.
Diversified bonds includes government, corporate and other bonds. Diversified bonds can often provide positive returns in years when returns on shares are negative. It is designed for investment over the medium term with the potential for moderate returns.
Australian shares include returns from dividends and capital gains/losses. Investing in Australian shares means buying ownership in companies and sharing in profits and growth. Shares can produce high returns but the risk level is also high and shares are designed for investment over the long-term.
International shares include returns from dividends, capital gains/losses and currency movements. Investing in international shares involves buying ownership in predominantly overseas companies and sharing in profits and growth. Shares can produce high returns but the risks are also high, so this asset class is designed for investing over the long term. Currency movements may also impact returns.
Property includes industrial and commercial property, both in Australia and overseas. It normally produces better returns than cash or bonds, but it can be a more volatile investment and is considered a moderate to high risk investment. Currency movements may also impact returns.
Consists of alternative assets with growth characteristics and includes private equity, credit and absolute return investments with growth characteristics. Private equity mainly involves investment in private or unlisted companies both in Australia and overseas. It can provide high levels of return but also comes with a high risk level. Currency movements may also impact returns.
Infrastructure includes toll roads, airports, ports, power stations and other community projects and assets, both in Australia and overseas. It can produce high returns with a moderate to high level of risk. Currency movements may also impact returns.
Defensive Alternatives include bonds, loans and absolute return investments with defensive characteristics, both in Australia and overseas. It can produce moderate returns with a moderate level of risk. Currency movements may also impact returns
For more detailed information, download the How we invest your money booklet.
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