Whoever has financial assets at his disposal can either continue to increase or hedge against risks. The asset management of liquid funds is the preferred form, because investments can be made quickly if necessary. In this way, one can react immediately to opportunities and risks. Securities in particular, especially stocks and bonds, have played a prominent role for a long time. Of course, there are also funds. In the meantime, they flank further investment opportunities. Investments in raw materials or cryptocurrencies are mentioned here. And the classic gold, platinum or other precious metals remain interesting for some investors as well as gemstones.

They say that money rules the world. At least it can be said that it is quite capable of mastering the thinking of those who possess either particularly little or particularly much of it. Anyway, money is not a pure blessing for those who have more than enough of it. What should we do with it? How do you prevent wealth from falling prey to the multiple risks of this world? And what you should always consider when considering: how do you ensure that your own descendants can also benefit from it? After all, one wishes them a fulfilling, worry-free life, in which money also plays a special role. Alone for this undoubtedly generally understandable reason, many wealthy private individuals worry about the management of their assets.

One aspect of this is the asset management of liquid funds. In addition to other asset classes, such as real estate or art, the asset management of liquid funds is probably the most important. Because the reallocation of liquid funds is the easiest and fastest, ergo most easily implementable form of asset allocation. Therefore, in this article, we want to take a look at the various options that can be used in asset management of liquid funds as an investment target.

But before we go into detail, let’s go into one factor in the asset management of liquid funds that has a significant impact on the decisions here, namely you. If you want to manage your financial assets, then it depends primarily on your goals. Do you want to invest your liquid assets to build wealth? Or have you already made it to some fortune that you want to keep growing? But maybe now that it has multiplied greatly, you just want to hedge it against all kinds of risks?

As you can see, asset management can only produce the desired results if you are aware of its goal. In doing so, you should also consider the various stages that assets go through in the course of their existence. Building, increasing, securing, and possibly decaying one day, fortune is subject to the same cycles that a living being goes through.

All these influences now affect your preferences in the asset management of your liquid funds. So you may decide initially for a moderate risk, have success and use a part of the profit now a bit riskier. But at some point you realize that you have won enough and now try to avoid any risk as much as possible. So now we look at which assets you can invest your liquid funds in and what you should look for.

Money can be invested in many ways. However, as already indicated, in terms of flexibility, only a few other asset classes play in the same league as those of securities. But you can also notice clear differences in securities and thus delineate some subgroups. In addition, we complement our considerations by addressing some particular asset classes.

Probably the most famous securities are the shares of listed stock companies. In fact, stocks offer significant asset gains in the long run. This is at least true if you look at the development of stock indices over the past decades. Anyone who invested in Twitter shares, for example, should have been pleased about the acquisition by Elon Musk. There are always individual cases in which investors ultimately made losses – Wirecard greets – but such surprises are rather exceptional phenomena. Nevertheless, precisely this risk is one reason why one should turn away from stocks in the phase of securing assets and replace them with other, less risky asset classes as investment targets.

Funds are one way to avoid risks when investing in stocks while still enjoying their benefits. The fact that there is a wide spread of invested funds also spreads the risk of default. Therefore, the investment strategy of considering equity funds in asset management is certainly a rather cautious strategy. Nevertheless, it is certainly successful. The Norwegian sovereign wealth fund has demonstrated this very impressively year after year with yields of around 6%. In addition, it must be noted that various funds have now switched to ethical, environmental or other moral standards when choosing the stocks in which they invest. Those who are also concerned about this can certainly make it easier to invest in such funds. Because with such funds you save the effort to check all criteria when acquiring individual shares yourself.

Unlike stocks, fixed-income securities are a very different alternative to managing liquid assets. Because here you know in advance what return an investment should bring. After all, these are basically loans. The variety of bonds on the securities market is astonishing. You can invest in short, medium or long-term bonds. Furthermore, a distinction is made between bonds in companies and government bonds. Accordingly, investments in foreign currency bonds or in euro bonds are available. This means that the selection of bonds for asset management is even greater than the number of different stocks on the global stock market.

The commodity market is also an interesting option for investment. Thus, either ETCs (exchange-traded commodities), futures contracts, i.e. commodity futures, or commodity ETFs come into consideration. all three cases are portfolio investment.

And here, too, the selection is almost huge. For example, a rough distinction can be made between energy raw materials, agricultural products and metallic and non-metallic raw materials. They range from the classic coal, crude oil, natural gas and uranium as well as iron, copper, aluminum and nonferrous metals to wheat, soya, palm oil, cattle or even pig bellies to the rare earths (especially niobium and tantalum) and the now highly sought-after raw material lithium, for which hardly any investor was interested 30 years ago. In addition, precious metals also play a certain role here. In addition to silver and gold, platinum and palladium are also tradable in this way. Even noble gases find their niche here.

On the one hand, the price fluctuations of raw materials on the markets are often more predictable and less abrupt, because there is a generally homogeneous sales market whose demand for the corresponding raw materials is known. In addition, commodity transactions usually take place via established supply chains. Exceptional events, such as the COVID 19 pandemic and its side effects, lead to drastic changes in the price development of raw materials. But these often balance out in the medium to long term. But this also means that you can adapt very well to long-term changes and thus have the opportunity to benefit from future developments. Particular importance is currently attached to investments in alternative energy raw materials such as hydrogen.

However, there are also raw materials for which future availability is hardly exactly predictable. This is particularly true of agricultural raw materials. For example, the market for coffee beans, vanilla, cocoa or olive oil has often fluctuated due to extraordinary events in the past. So there is some potential to speculate on profits.

Excluded from the range of commodities (and securities), gold and some other precious metals can be considered as an asset. Undoubtedly, this also applies to diamonds and other gemstones.

However, the significance of gold in this context has historical roots. Because gold was in the past as a currency reference. For a long time, there was a coupling of the US dollar in particular to the gold troy ounce. No wonder, then, that various issuers still mint coins made of gold or other precious metals and put them into circulation. Finally, gold has been used as a metal for coinage since ancient times. Because it was a scarce commodity, handy and represented in abstract form the equivalent of purchase objects.

Gold today hardly has this significance. Nevertheless, gold can still be taken seriously as a speculative object. The advantage of gold over other asset classes can also be seen in the fact that you can physically own it. A comprehensively secure safe is recommended here, however.

However, the return that gold yields in the long term is now rather low compared to other asset classes. But anyone who knows how to exploit short-term price fluctuations may also be successful with gold from time to time.

Also rather apart from securities, cryptocurrencies are to be regarded as an asset. In addition to the most famous crypto currency Bitcoin, there are already many other alternatives here, such as Dogecoin, Litecoin or Ethereum. But what they have in common with securities in a way is that they are easily traded on stock exchanges. Due to the fact that cryptocurrencies are a fairly new form of investment, the return was initially partly astronomical. However, the trend has now weakened somewhat. In addition, a lot depends on the characteristics of the respective crypto currency. Therefore, overall, cryptocurrencies are still a niche product in asset management.

In addition, the taxation of cryptocurrencies has been exposed to certain tax uncertainties in the past. Meanwhile, the highest financial administration has positioned itself on this. Nevertheless, one encounters some hurdles in the taxation of cryptocurrencies in practice. But the advantage is that cryptocurrencies may lead to tax-free profits. In any case, asset management with cryptocurrencies is more of a recommendation for investors with sound knowledge.

You can also achieve a return with real currencies. However, the conditions under which one has to make profit-oriented decisions when trading forex are quite volatile. Therefore, foreign exchange as an investment in asset management are of interest only to really risk-taking investors.

In the special case of cryptocurrencies, we have already pointed to a special case regarding the taxation of profits generated from asset management. Now follows a brief overview of the taxation rules for the other asset classes.

Profits from trading in securities and similar financial products are subject to the provisions of § 20 EStG. Here, an offsetting of profits and losses is only possible within the same type of investment. Thus, one can make losses from trading stocks only with profits from such a trade. Settlement with dividends, however, is excluded. The same applies, for example, to gains and losses relating to shares in bonds or securities funds. So you have to distinguish strictly and specify this in the preparation of the income tax return in corresponding detail.

Profits achieved by buying and selling real assets, in particular precious metals or gemstones, or foreign exchange as well as, as already mentioned, cryptocurrencies, fall under the other income according to § 22 no. 2 EStG. What should be understood more precisely by this, explains § 23 EStG. Since the assets referred to in this article are not of daily use, there is a speculative period of one year. So you should ideally avoid the purchase and subsequent sale within a year, in order to obtain the profits tax-free. However, since one should pay less attention to taxation than to the price development, this is rather minor in some situations with acute need for action.

Apart from this, there is an allowance for such winnings in the amount of EUR 600. For our considerations on asset management, it is therefore completely irrelevant.

So let’s get to our final word. If you are interested in asset management, you have a vast universe of different types of investment to choose from. Money investments in securities are still the classic. Both stocks and bonds are well-established goals for generating returns. Of course, this also applies to corresponding funds. However, other asset classes have also become increasingly attractive in asset management. Commodities and cryptocurrencies are alternatives, but you should inform yourself in advance in detail. However, taxation should also be taken into account.