Types of assets
There are two major types of assets that make up the building blocks of an investment: growth assets and financial assets.
Growth assets
Growth assets, including shares and property, earn income from dividends or rent and increase in value from capital gains. Capital gain is the rise in asset value, which means that the total value of these investments can actually grow in the long term. However, the total value of these assets can be volatile meaning they can rise and fall dramatically in the short term. For example, you may have noticed how the share price for a company can vary dramatically each day.
Shares (equities)
Shares represent ownership in a company and are often referred to in investment terms as 'equity'. Generally they can be bought and sold on the stock exchange and offer the opportunity for high returns, but also the potential for high risk.
Property
A property investment can provide rental income and the prospect of growth in value over time. The three main areas of property investment are commercial property (eg office buildings), retail property (eg shopping centres) and industrial property (eg factories). You can also invest in property trusts, which are made up of many smaller investors who pool their funds to enjoy the same benefits as a single large investor.
Financial assets
Financial assets, including fixed interest and cash, earn returns primarily from interest. This means that financial assets usually provide lower risks due to fixed repayments, but returns are also likely to be lower over the long term. For example, when you put some money aside in a term deposit with a bank, you may not be getting the highest interest rate around but you do know that, after a fixed period, the bank will pay you a predetermined interest rate and return your investment amount.
Fixed interest
Fixed interest can be bonds and other debt securities issued by a government or corporation. If you invest in fixed interest, you lend money to the issuer who promises to make regular interest payments with full repayment of the initial investment on an agreed date in the future.
Cash
A cash investment usually takes the form of a short term deposit with a bank, cash management trust, merchant bank or fund manager. In return, you will receive interest on your investment.
Telstra Super’s investment options
Telstra Super offers investment options that invest in both growth and financial assets in varying percentages. Depending on the type and portion of growth or financial assets, the level of risk of each investment option varies. For more information about Telstra Super’s investment options check out our investment option pages.