Start Here · Beginner · 6 min

The map of tradable assets

You can name the main asset classes and say in one sentence what you own or agree to in each.

A map before the journey

Turn on the news and you hear about the stock market, the price of gold, the dollar, interest rates and bitcoin, often in the same minute. It sounds like a hundred different worlds.

It is closer to seven. Almost everything you can buy or sell on a market belongs to one of a few families, called asset classes. Each family works differently: what you own, how you can earn, and what can go wrong. Once you can place an asset on this map, every later lesson has a home.

The seven families

Stocks. A stock, also called a share, is a small piece of ownership in a company. If the company does well, the share can rise in value, and some companies pay part of their profits as dividends. If it does badly, the price can fall, in the worst case to zero.
Bonds. A bond is a loan. You lend money to a government or a company, which usually pays you interest and promises to repay the amount at the end. Bond prices move too, mainly with interest rates and with the borrower's ability to pay.
Funds and ETFs. A fund bundles many assets into one product. An ETF (exchange-traded fund) is a fund whose shares trade on an exchange like a single stock. One ETF share can hold hundreds of companies, or bonds, or gold.
Commodities. A commodity is a raw material: energy such as oil and gas, metals such as gold and copper, or crops such as wheat and coffee. Prices react to supply, demand, weather and politics.
Currencies. On the forex market, currencies are traded against each other in pairs, for example euro against US dollar. You never buy a currency on its own, only one currency in terms of another.
Crypto. A crypto asset is a digital token recorded on a blockchain, such as bitcoin. Prices can swing far more than in most other classes, and many platforms offer fewer protections than a regulated bank or broker.
Derivatives. A derivative is a contract whose value is derived from something else: a stock, an index, a commodity, a currency or a crypto asset. Options, futures and CFDs are derivatives. Many of them use leverage, which magnifies gains and losses alike.

The dashed lines show how the families connect: funds hold assets from other classes, and derivatives are built on top of them. Real estate is an asset class too, but it is not part of this course.

One company, three ways

Take a fictional company, Acme Energy, and see how the same name can appear in different places on the map.

You buy 10 Acme shares at 50 each. You own a tiny part of the company, and your 500 rises or falls with the share price.
You buy an Acme bond for 1,000 that pays 4% a year for five years. You are a lender. You receive 40 a year in interest and the 1,000 at the end, as long as Acme can pay.
You buy an option on Acme shares. You own neither the company nor a loan, only a contract whose value depends on where the share price goes. It can expire worthless.

Same company, three very different deals: owner, lender, or holder of a contract on the price. Before you look at any chart, ask which of the three you are dealing with.

Common mistakes

"A share is a bet on the price." It is a piece of a company. The price is what others are willing to pay for that piece today.
"Bonds can't lose value." Bond prices fall when interest rates rise, and a borrower can fail to repay.
"An ETF is safe because it holds many assets." It spreads risk across its holdings, but when the whole market falls, the ETF falls with it.
"A CFD on gold is like owning gold." It is a contract on the gold price, often with leverage, not the metal itself.
"Crypto is just digital cash." Most crypto assets behave like highly speculative investments, with large swings and fewer protections than money in a bank.

The takeaway

Before you trade anything, know which family it belongs to: are you an owner, a lender, or holding a contract on someone else's price?

Check yourself

Quick quiz

4 questions. Instant feedback, nothing is saved.

1You buy a share of a company. What do you own?

A share is a slice of ownership. A loan to the company would be a bond, a contract on the price would be a derivative.
2Tap the asset class where you lend money and usually receive interest.

Tap the chart.

A bond is a loan to a government or a company. It usually pays interest and promises to repay the amount at the end.
3What makes a derivative different from the other asset classes?

A derivative is a contract whose value is derived from an underlying asset. It can lose value quickly, especially when leverage is involved.
4An ETF that tracks a stock index is best described as…

Funds and ETFs bundle many assets. One ETF share gives you a small slice of the whole basket.

of 4 correct.