If you know a little about finance, then you probably have a good understanding of each asset class together with its function. Yet, as Robert Kiyosaki explains, in school we are taught little about money, meaning that most of us are not ‘in the know’ about asset classes and their functions, despite it’s basic and crucial economic knowledge and an important factor in determining your ability to build wealth and gain financial freedom. Anyway, in essence the four asset classes are:
- Equities/Stocks: i.e. owning a piece of a company.
- Fixed Income/Bonds: i.e. government or corporate bonds.
- Cash/Cash Equivalents: i.e. money stashed under your mattress or money market instruments.
- Real Estate/Commodities. i.e. property or precious metals.
Each asset class has their own particular set of characteristics. Some are more liquid then others for example. For more details on each asset class this Investopedia article and make sure to watch Robert Kiyosaki views about the four main asset classes and which ones he believes you want to be in!
