From 401(k)s to pension funds and endowments, there are a number of different types of investments that require close management in order to grow. These funds are generally placed in a number of types of investment vehicles of varying degrees of risk and growth.
Asset management refers to any type of oversight of funds for the purpose of meeting investment goals. Though it usually refers to managed pools of money, it can also be the development of real estate or physical assets as well. It can be done on an individual level, through personal investments like retirement plans or collective investments like pension funds. Asset management can also be from institutions, like corporations or non-profit organizations that maintain endowment funds.
For the type of asset management that deals with invested pools of money, there are often advisers who choose the mix of investments to ensure growth. The money can be invested in the stock market, bonds, currency or even physical assets like gold or livestock. Those with input and oversight into their retirement funds likely already know that these investments are a mix of risk and reward. For funds that are not meant to be used for a longer period of time, the assets can be of a higher risk variety. The investor is willing to wait out the short-term volatility for the greater long-term gain. Those closer to retirement or funds that will soon be accessed are generally put in safer low-risk, low-reward investments.
Like individual investments, organizations can also invest their funds for a variety of purposes. Companies have pools of money that are used for acquisitions, developing new products or physical expansion, and these are often invested in order to grow. Some companies that deal with large amounts of client money can even invest the funds they hold for these clients. Payroll companies, which take large amounts of money to create paychecks and pay the necessary taxes for their clients, often invest the money. Even non-profit organizations, like large charities and universities, have endowments that are invested to create working funds for the operating budget.
