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The Financial Education Company

Dictionary of Financial Terms

The financial terms you need to know in language you can understand

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Asset class
An asset class is a specific category of investment, distinguished in a defining way from every other asset class.

For example one asset class may include equity investments while another class is made up of debt investments.

Stock, bonds, and cash -- including cash equivalents -- are major asset classes. So are real estate, derivative investments, such as options and futures contracts, and precious metals.

When you allocate the assets in your investment portfolio, you decide what proportion of its total value will be invested in each of the different asset classes you're including.