Any special circumstances that may exist must be taken into account, for example whether it is an estate that you invest for. Normal Long-term Relationships between Asset Classes Equities have a higher expected rate of return than bonds, but are more risky. Money market instruments have the lowest expected rate of return, but they also have the lowest risk and are the most liquid of all the asset classes. Foreign investments are good ways of reducing risk through diversification because their returns are not highly correlated with those of domestic securities and the domestic currency. Real estate offers rates of return that are comparable to those offered by other equity investments with about the same level of risk.
Real estate is also a good inflation hedge.
However, real estate is illiquid and often must be purchased in large blocks. Real estate is a good vehicle for reducing risk through diversification because its returns are not highly correlated with those of other asset classes. Interest rates, however, do play a major role in the value of properties. Venture capital investments offer potentially very high returns but with considerable risk. Like all equity investments venture capital offers protection against inflation.