Financial Assets
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What are Assets?
An asset is a
good that can be assigned a value. Goods can be
tangible or intangible.
Assets in Different Contexts
There are variations in the definition of assets depending on the context in which the term is used:
Assets in the Financial Industry
A term used to describe securities such as bonds, shares, derivatives, investment funds, etc.
Assets in Business Administration
An item with a tangible monetary value that can be reflected in the balance sheet, e.g. a machine, an IT system, a building.
Assets in Economics
Refers to the total assets of a state.
What Types of Financial Assets are Available?
Various asset classes must be distinguished when it comes to financial assets. The following are some of the most important:
- Shares
- Bonds
- Money Market
- Commodities
- Real Estate
There is sometimes considerable variation between asset classes in terms of characteristics such as security, liquidity, and profitability. When deciding on an investment, investors should take these into account.
In the broadest sense, personal items, such as vintage cars, furniture, and jewelry, can also be considered financial assets. These items can also be converted into cash. Whether returns are possible with these objects is highly dependent upon demand or how much the buyer is willing to pay.
Real Assets
Real assets are tangible assets that can be touched or viewed in person. Among the real assets are, for example:
- Real Estate
- Commodities
- Infrastructure Investments
These assets are considered to have stable value and generate long-term cash flow.
Wealth Management – Asset Management
What are the best assets to purchase? What are the best ways to distribute capital among the various assets? Wealth management deals with these questions. In theory, distributing capital among several assets is a good strategy for distributing risk.
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