Investing · General financial education

Asset classes (shares, bonds, cash)

Asset classes group investments by the source of return, such as shares, bonds and cash. A class does not prescribe how you should split your money.

In more detail

For shares the source is a residual claim on a company. For bonds it is a promise of interest and repayment. Cash usually pays deposit interest but loses purchasing power when prices rise. Real assets (such as property or commodities) earn from use, rent or the price of the asset itself.

Background

The same product words can mix different sources. A fund name does not replace the source question. Typical volatility often follows the source, but it is not a fixed ranking and not an allocation rule. Finmon does not prescribe a mix; sorting them only helps you read an offer.

An example

Two offers: one gives you a share in a company’s profits, the other pays an agreed coupon while the issuer pays. That is first a difference of return source, not yet a decision about weights.

A common misconception

Asset class means: such-and-such a percentage of each bucket.

The class names the return source. A mix rule does not follow from that.

Source: Investor.gov · Asset allocation. Last reviewed: 2026-10-29. Editorially reviewed on 2026-10-29. Next review 2027-10-29. Version 0.2.0. Finmon explains. It does not advise. Not investment, tax or legal advice.