Asset Class
An asset class is a group of investments with similar behavior, such as stocks, bonds, or cash.
Why this matters
Different asset classes react differently to economic conditions, which supports diversification.
Simple example
Stocks and bonds are two major asset classes used in many beginner portfolios.
Common mistakes
- Thinking all assets move together the same way.
- Putting everything into one asset class.
- Using asset class labels without understanding actual holdings.