Understanding Asset Classes - what they are and why you need to know
Financial jargon can feel like a whole other language so it’s tempting to shrug it off and leave it to the ‘experts’. But I think that’s a load of patriarchal BS and as usual, I’m here to break it down for you and translate everything into plain English.
If you’re the kind of woman who cares about her finances - and I think you are because you’re here…even if you might not always understand the terminology! - then grab yourself something nice to drink, get comfy and let’s dive into asset classes, specifically, what they are and why you need to know about them!
So, first up, when you hear the term "asset class," does your brain kinda kick out of gear and maybe your eyes glaze over a little? You're not alone. For so many, finance lingo can be a total buzzkill, so let’s just start with the basics and we’ll get to the part where you can make a shit-ton of money once you know what you’re doing.
WTF is an Asset Class?
In a (Coco)nut shell, an asset class is just a fancy term for a group of investments governed by similar laws and regulations. Sound intimidating? Nah, it's a piece of cake once you get the hang of it.
If you haven’t already, get my FREE Asset Class guide for the full down low.
This handy one page pdf breaks down many different types of asset classes (it’s not an exhaustive list because there are so many but gives you the main ones) and hopefully it’ll inspire you to learn more about 1 or 2 asset classes - which brings me to my next point...
Stick to what you know
Here's the kicker – it's better to become a master of one asset class before moving on to the next. I mean, you’re not going to become an expert guitarist by learning five different instruments at the same time, right? Same goes for asset classes.
I focused on property for a solid decade, and it paid off. Once you've got one asset class down pat, you can add more to your portfolio. But if I can give you one piece of advice, it’d be this: don't let FOMO drag you all over the place.
Having an intimate understanding about the asset class you’re playing in is crucial before you move onto the next one. It's like hiring a team. You don't want to be paying a bunch of people who all have random skills you can’t use in your business; you want a team that brings value and works together cohesively.
Asset classes in action
Let's take real estate, for example. We all know it, we're all fairly comfortable with it. Most of us think of it as buying a property, holding onto it, and hoping it appreciates. But even within the real estate asset class category, there are lots of different strategies to choose from.
Are you going to be a buy-and-hold investor, a property flipper, or maybe even a developer? And which type of real estate will you focus on - residential, commercial or industrial? Each strategy is like a different flavour of ice cream – you pick the one you enjoy the most because that’s the one you’ll find most satisfying.
My asset classes, my rules
In my world, I like to roll with three main asset classes: business, property, and stocks. But within these asset classes, there are specific industries, sectors, and strategies to explore.
For instance, in the business asset class, I have my niches of female startups, commercial cleaning, child care and online consulting. In property, I dabble mostly in commercial property (though my focus used to be on residential property and that was an evolution in itself). And stocks – well, that’s a whole different game for another blog post.
The old rule that still stands
What do they say? To master anything, you need to spend at least 10,000 hours practising it. Remember, being a beginner is ok, we all have to start somewhere but with asset classes, the aim is to become a master.
The more time you invest in learning and intimately understanding one asset class, the better your results will be. Time is your friend when it comes to building your financial portfolio and your wealth.
So, my love, I encourage you to get real cosy and comfy with your asset classes. Downloading my FREE Asset Class PDF is a really good place to start.
Let me know in the comments below any asset classes you’re currently playing with and which ones you’d love to know more about and I’ll go into more depth in another post!
Coco xo
EXPLORE DEEPER
Click here for your free downloadable ‘What is an Asset Class?’ & why you need to know more about them.
