Stocks, bonds, and cash equivalents are all
considered asset classes — as are real estate, collectibles,
precious metals,
futures
and
options,
and other alternative investments. Each asset class carries different
types and levels of risk and serves a different purpose in your
portfolio, such as providing
capital
preservation
or potential
growth.
Stocks
If you want your investment portfolio to
grow in value over time, you’ll probably need to allocate
at least some of your assets to stocks. Most financial experts
say that the younger you are, the more you should stress stocks.
That’s because historically, stocks have turned in the strongest
performance over the long term. And if you begin investing early,
you have time to ride out the inevitable ups and downs in the
stock market. Although your stock investments can go up and down
significantly in value over the short term, the longer you stay
in the stock market, the more likely you are to come out ahead.
In fact, over periods of 15 years or more, stocks have always
provided positive returns.
