Humans have been saving stuff for over a millennium. It is not a new idea that one should save stuff for their future. However, saving does not always help, at least in all walks of life. Even ants, the most societal creatures in the insect world save for their future. But it does not help advanced beings such as humans, particularly in the sophisticated, dynamic, and modern world.

Time is the greatest enemy for most things and so is it to savings. In time, any food or organic matter decomposes, and any inorganic matter erodes. It is surprising but an unarguable truth that this natural phenomenon applies to savings done by humans also. While humans save a lot of stuff such as food which is perishable, what is dearer to us is what we call us Money.

It is a known fact that the price of almost everything changes overtime. Sometimes it goes up and sometimes it goes down. But in the long term, the prices generally move in the upward direction, which means, the purchasing power of our dear money goes down slowly. What we can purchase for a hundred bucks may cost us more. In other words, the quantity of what we get for a hundred diminishes. This is called Inflation. So, it is no rocket science that idle money gradually loses its value in time. Hence, what we should be doing is not Saving. If the prices increase at a certain average rate over time, what we need is a rise in the value of our money at a rate higher than the inflation rate. To achieve that, we need to Invest our money. Right investment must give a return higher than the inflation rate and must be commensurate with the risk we take. That means, higher the risk, higher must be the return. Let us talk about some investment types.

In the present day, investments are divided into what advisers technically calls as ‘Asset Classes’. These asset classes are many and some of them are less known to many. And, even if someone is aware of these all, it is seldom that we see someone who invested in unorthodox asset classes. Let us see some of these to get a general idea about asset classes.

• Equity – means investing in equity shares of a company. When one directly or indirectly invests in the shares of one or more companies, though they are called equity shares or shares in common language, such investment falls under the asset class called ‘Equity’. Some variants of equity are buying Equity Shares directly, equity-oriented Mutual Funds, Unit Linked Insurance Plans, Portfolio Management Service, and Private Equity etc.
• Debt – involves borrowing and lending. But when it comes to investing, in most cases, though people invest in debt products (depositing money with institutions for a fixed rate of return or growth), it is generally from investor’s perspective looked at as lending money to an institution but an investment being made. Theoretically but arguably, Debt is regarded as less risky than Equity. Some debt products that most people are familiar with are Bank Fixed Deposits, Corporate Fixed Deposits, Bonds, Post Office Small Savings Schemes, Public Provident Fund, Non-convertible Debentures, and debt-oriented Mutual Funds, etc.
• Real Estate – means a piece of land along with any constructions or structures attached to it, whether natural or man-made. These attachments may include water, buildings, houses etc. It is a form of property that differs from other personal assets, not permanently attached to the land such as vehicles, boats, farm equipment etc. There are five main categories of real estate viz. residential, commercial, industrial, agricultural, and other use. One can invest in real property by purchasing a house or other property, or through a real estate investment trust (REIT). Land is different from other assets for its immobility, indestructibility and uniqueness. Real estate or property is one of the most favoured assets for consumption, investment and commercial purposes in India.
• Gold – is an eternal asset class since the beginning of time favoured by everyone regardless of gender, age and geography. Gold is a precious metal. It has emotional, cultural and financial value and different people across the globe buy gold for different reasons, often influenced by a range of national socio-cultural factors, local market conditions and wider macro-economic drivers. It is generally considered as a hedge against inflation. Also, it is not a wealth creation tool because, it is Wealth itself. Investment advisers globally advise that a certain minimum amount of investment must be made in Gold.
• Commodities are raw materials that are either consumed directly, such as food, or those that are used as to create other products. Commodities include Metals such as Gold, Silver, Platinum, Copper etc., Energy products such as Crude oil and Natural gas, Agricultural products such as Pulses and Cereals including Rice, Wheat, Corn, Bengal gram etc. and Livestock and Meat products such as Eggs, Pork, Cattle etc. The best and the modern way to invest in commodities some of which are also perishable is through trading on exchanges. Investors who trade in commodities must have sufficient knowledge about the factors that influence the price movements, supply, and demand etc.
• Currency – in investment language is also referred to as Forex (foreign exchange). Like commodities, on can invest in forex through exchange trading. The International currency market involves participants comprising banks, corporations, central banks, investment management firms, hedge funds, retail forex brokers, and individual investors. Trading in currencies is very risky. Currency futures in India are cash settled. That means, no actual delivery of the currency happens. In India, when one says currency trading, the reference is always currency Future contracts on exchanges. One is strongly advised to consult an adviser to thoroughly understand the risk associated with forex trading. While some investors trade in currency for hedging, trading otherwise requires high appetite and tolerance for risk.

Other asset classes can include art, antiquities, vintage cars, and collectibles such as stamps (philately) and coins etc. and not generally suitable to all types of investors. Investments can belong to one or more asset classes depending on the product structure. Sometimes a product can be an equity-oriented product and sometimes debt and sometimes a combination of both or include other assets such as gold and commodities. One must select an asset class or a combination of them in a proportion that matches their risk profile.