Types of Investments
Diversifying by asset class is fundamental to building a better portfolio. Understanding the nature of each asset class and its potential for returns can help you better determine the right asset mix needed to achieve your long-term goals.
Cash Investments
For investors who prioritize security and low risk over growth potential, cash and cash equivalents such as savings and checking accounts, short-term GICs, Treasury Bills and money-market investments may be appropriate solutions. Mutual funds holding these types of investments may be appropriate for investors who have specific short-term goals and cannot tolerate a decline in the value of their investment.
Fixed Income
Fixed income investments deliver a moderate level of risk and include long-term GICs, government bonds, corporate bonds, strip bonds and asset backed securities. Mutual funds holding fixed income investments may be appropriate for investors with a medium to long-term time horizon who are seeking regular cash flow from their investments or who want to diversify their investment portfolio.
Equities
For investors with a long-term time horizon, equity mutual funds represent an excellent portfolio investment option. In comparison to cash and fixed income mutual funds, equity mutual funds have historically recorded stronger performance and provided greater growth potential. Despite short-term volatility, equity mutual funds can deliver significant rewards for investors who maintain discipline and stay invested. Returns are in the form of dividends and/or capital gains.
To learn more about individual RBC Funds and how they can address your investment objectives, access our Fund Updates. If you are ready to invest now, contact your advisor or explore the options available to invest with RBC Financial Group.
To learn more about diversification see below:
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