Advantages and Disadvantages of the Various Asset Classes

Cash
ADV
High security and liquid
Interest will always be paid if held in a bank
DISADV
Interest rate vary with institution and duration
Best rates often have restrictions
May not beat inflation

Bond
ADV
Fixed interest paid regularly
DISADV
Bond issuer may default on both principal and interest payments
Value of bond may fluctuate

Equity
ADV
Equities can increase significantly in value
Can outperform other asset classes over the long term
DISADV
Equities can also fall significantly in value
Very difficult to predict what will happen in short and very long term

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