Investors have a mindset that is a long-term game. They're willing to take on some level of risk to achieve a return, but are more concerned about a smooth return for their portfolio over the long term.

Investors are not swayed by weekly, monthly or even yearly market fluctuations: they understand what they are invested in and know that markets behave in certain ways at certain times.

Did you know you’re already an investor? If you have a superannuation account, or any other retirement savings for that matter, you are already an investor.

Asset allocations within portfolios are listed as percentages. There are different types of assets and they can be growth assets or defensive assets.

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Here are four key asset types you need to know about, and how they work.

Growth asset classes

Growth assets are there to do what they say: grow! To grow your wealth, ideally you want a decent chunk of your money invested into this asset class.

It’s important to understand that, usually, growth assets are best held for at least six years as the asset values may fluctuate.

I’ll let you in on the biggest secret to growing your assets: compound interest. A common growth asset many people know of is an investment property.

It produces an income for the owner (rent) but the value of the actual asset (the property) should also increase over time.

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I reckon this is better than compound interest. Australian shares, for example, are companies listed on the Australian Securities Exchange (ASX). They are publicly traded companies and each day the share price is updated. Listed shares are generally considered fairly liquid.

Then there’s international shares that generally have the same liquidity as Australian shares based on the same concepts.

There can be some other inherent risks involved with international shares, such as currency (you can buy these with your currency or the currency of the country where they are listed) and other government and legislative risks to the local exchange.

Property and alternative assets

Property is straightforward. It can be residential, commercial or industrial.

But then there are alternative assets like infrastructure such as airports (these are usually non-government owned), electricity, water and gas.

Some fund managers might allocate these as growth assets and some may allocate them as defensive. There could be a case that the Sydney Harbour Tunnel has a stable flow of income and capital secure characteristics, so a portfolio manager may take the view that it’s defensive.