Investment Assets

The four main asset classes are cash, bonds, property and shares (equities), none of which are risk-free.

Cash

Cash is the least risky of the four but it tends to deliver low returns, which means the value of your money can be eroded in times of high inflation.

Bonds

One step up the risk ladder are government bonds, or gilts, followed by investment grade corporate bonds, where you effectively lend money to large companies in exchange for a fixed rate of interest. High-yield bonds, also known as 'junk bonds', are an even riskier option because they deal with companies seen to have a high risk of default.

Property

Investing in commercial property, such as offices, supermarkets and warehouses, can grow your money through rental income and growth in the value of the property you own, but can be illiquid - meaning it can be hard to sell if you need to access your money.

Shares

Shares, also known as stocks or equities, are seen as the riskiest asset class, as stock markets can be highly unpredictable. But some markets are considered riskier than others.

Investing in developed markets such as the UK and the US is considered relatively safe compared to other equity markets, although these contain their share of higher risk options, too, while emerging markets (such as Brazil, China and India) equities are likely to be more volatile.

Buying shares in geographical regions less-frequented by investors can be expensive and the shares can be comparatively illiquid.

For more information please contact Southern Financial Services on 01698 269 977 or email enquiries@southernfs.co.uk and we will be happy to assist you.

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Founded in 1998, Southern Financial Services is an independently owned, family company that prides itself in offering easy to understand, professional advice to clients both across Scotland and throughout the UK.