Final answer:
Shares and property are considered growth or risk assets, which can offer significant capital gains and dividends in the case of stocks, or rental income and nonfinancial benefits such as having a place to live in the case of property.
Step-by-step explanation:
Shares and property asset classes are often categorized as growth assets or risk assets. Growth assets are investments that have the potential for significant capital gains. Shares represent ownership in a company and can result in capital gains through an increase in stock price, while dividends offer additional returns. On the other hand, investing in property can generate capital gains as property values increase over time. Properties also provide a nonfinancial return; for example, if you own a house, you can live in it.
It is important to note the distinct characteristics that come with these types of assets. The rate of return on tangible assets, such as houses, can be moderate. They present a varying level of risk; moderate with housing or potentially high if investing in more speculative items like gold or collectibles. Furthermore, liquidity is generally low for tangible assets like real estate or fine art, meaning that converting these assets into cash could require considerable time and effort to achieve a capital gain.
An index fund tracks the overall behavior of the stock market and can be a way for investors to participate in the financial growth of a broad market without having to select individual stocks.