There are many asset classes available out there for you to invest in, but we're only going to cover up the four most relevant ones for the average investor.

Cash Deposits

The first asset class that's available to you are usually cash deposits.

A cash deposit is simply the monies you have, and you put it with a bank. The bank will hold that money for you and in return, they'll pay you a small interest rate. Now, depending on where you are in the world, they may pay you from 0.1% per annum to 1.5% per annum for that deposit.

Bonds or Fixed Income

The second asset class that may be available to you are bonds or fixed income. A bond essentially is an IOU. It can be issued by a government or even a company, what you would do is you as an investor will buy the bond and the government or the company will say, "Okay, we'll hold this money for you for a certain number of years and every year, we'll pay you a dividend or a coupon.

They can either pay you monthly, they can pay you half-yearly, or yearly, depending on the structure of the bond.

A bond is effectively the government or a company holding your money, giving you a certain rate every year for the whole period that you're holding. And at the end of it, they'll give you your money back.

Equities or Stocks

So the third asset class we're looking at is equities or stocks. Now simply put, when you buy a stock or an equity, you're effectively buying a part of a company. So what has happened is you're owning part of that company by paying for that share.

The historical return on equities is roughly about 8% to 12% per annum depending on how you do it.

Yes, there are some stocks which go up so much, and the other stocks are going down by a lot more. So they very much depend on how you're investing. When we talk about equities and stocks, we're talking global.

Mutual Funds

The fourth asset class that you may be able to access are mutual funds. Mutual funds are effectively a collective investment, buying multiple asset classes. There are many different kinds of mutual funds. There are mutual funds that only deal in equities. There are mutual funds that only been in bonds.

So a mutual fund is essentially a collection of investments.

For example, a person buying an equity mutual fund would actually have access to a collection of stocks with his money. Instead of buying each stock individually, his investments are actually exposed to multiple equities and it's the same for a bond mutual fund.With the same amount of money, you'll get access to multiple kinds of bonds instead of buying just one bond. This translates to lower risk for the investor because your money is spread out among multiple asset classes instead of just one.

Exchange-Traded Fund

Something similar to a mutual fund is called an ETF: an exchange-traded fund. They work in similar ways to mutual funds, they are just traded on the stock market.

So this list is by no means exhaustive. There are so many other asset classes available to you out there. What you want to do is start learning. Invest in yourself first in your education.

Using these different asset classes that are available, you can start building your investment portfolio.

Between these 5 asset classes, which one interests you the most? Comment down below and we just might write an in-depth blogpost about it too just for you!