Traditional Investments
Overview of Traditional Investments
Traditional investments typically include various asset classes that have been widely used in investment portfolios. Here’s a brief description of the main types.
Domestic Equity
Investments in stocks of companies based in the investor's home country. Domestic equities can provide growth potential but also come with market volatility risks.
International Equity
Investments in stocks of companies located outside the investor's home country. These investments expose investors to additional risks such as currency fluctuations and geopolitical instability.
Taxable Fixed Income
This category includes bonds and other debt securities that are subject to federal, state, and local taxes. These investments typically provide regular income but are sensitive to interest rate changes.
Tax-Exempt Fixed Income
Investments in bonds that are exempt from federal taxes, and potentially state and local taxes as well. These are often issued by municipalities and can be attractive for investors in higher tax brackets.
Satellite Asset Classes
These include investments in commodities, global real estate, high yield fixed income, and emerging markets equity. They are used to diversify a portfolio beyond traditional stocks and bonds.
Cash
Cash investments include money market accounts and other short-term instruments. They provide liquidity and safety but typically offer lower returns compared to other asset classes.