Investment is similar to an amusement park. At an amusement park, people go on rides that appeal to them; likewise, in the area of investment, people invest in areas that suit them. High-risk investments are similar to a roller-coaster ride. High-risk investments require a stronger stomach, but the thrill and the return are generally much greater than other investments. Low-risk investments are similar to the merry-go-round. While these investments are fun, they may be too sedate for some investors. The key is to find out which rides you like, based on your age, your goals, your budget, and, for some, your medical history. The rides in investments are called asset classes.

Asset classes are broad categories of investments with specific and similar risk and return characteristics. Asset classes are distinguished by the unique characteristics of particular groups of securities; these characteristics include the type of financial instrument, market capitalization, maturity, and geographic location. There are three major asset classes that most investors should include in their portfolios: cash and cash equivalents, fixed-income investments (bonds), and equities (stocks).