* Long Term Debt
* Short Term Debt/Liquid Funds/Cash
* Equity-Large Cap (Blue Chip)
* Equity-Small/Mid Cap, Others
* Gold
Understand Asset Classes
Asset classes simply refer to various assets available for investment. For this article I’ve identified five broad asset classes. People investing more in safer avenues avoiding risky assets would generally be considered as “Conservative Investors”. But before coming to conclusions, you need to see how much you invest in each of these categories or asset classes.
Long Term Debt
This includes fixed deposits, bonds, debt mutual funds, etc with tenure greater than 1 year. Fixed deposits offered by banks are safer compared to corporate fixed deposits. Within corporate fixed deposits the ones offered by large companies with good credit rating are safe.
Short Term Debt/Liquid Funds/Cash
This includes short term debt securities or debt mutual funds or liquid funds with tenure less than one year. Liquid funds can be called ‘very short term’ debt because they invest in securities maturing in less than 90 days. Liquid funds are meant as short term parking place for you savings when you are not sure where to invest. Cash held in bank as savings is also considered as one component although it is not a typical investment.
Equity-Large Cap (Blue Chip)
Stocks of large cap companies such as JKH,CTC,HNB, etc. These are companies which have a leadership in their industry as well as high level of reputation, experience, project management capabilities as well as superior brands. Further, qualities like quality of leadership, ethics, governance, etc will also be a plus.
Equity-Small/Mid Cap, Others
Stocks of mid-sized or smaller companies which have shown good growth potential and hold promise for bright future ahead. These are like the emerging stars which want to get in to the big league in the coming years.
Gold
Gold is money and is the ultimate safe haven asset and a great way, if not the best way, of ensuring wealth preservation and for passing wealth from one generation to the next.