Asset Class

An asset class is a group of assets which share common characteristics. Assets are categorized in asset classes based on how they are used in investing.

The most liquid asset classes are equities, fixed income, commodities and currency. Alternative asset classes are made up of less liquid assets and include real estate, fine art and collectibles among others.

Equities are used to grow wealth. Cash is used both as an investment (in the case of foreign currency trading) and as a store of wealth. Fixed income products such as bonds are used to protect wealth from inflation by delivering a yield based on time. Real estate is used as a store of wealth and a safeguard from inflation, and in some cases to grow wealth. Commodities are used to safeguard wealth from inflation because their value is based on their supply and demand at any point in time.

More on this topic:
Interactive securities broker comparison

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