Asset definition: What are examples of assets?

In most contexts, assets are things of value. That could be money, investments, physical property, or even intellectual property, like the rights to a song, film, or patent.

Of course, “asset” can also refer to qualities or traits of a thing or person that have value (but not necessarily monetary value). We’ll cover all the different asset definitions in the guide below.

What is an asset?

The definition of an asset can be slightly different depending on the context. Here’s the asset definition for three different contexts, along with examples of how the word might be used.

• General context: An asset is a useful or valuable thing, person, or quality. For example, Aaron’s writing skills were an important asset in pursuing his career in journalism.

• Financial context: An asset is a piece of property owned by a person or company that has economic value. For example, throughout their lifetime, my grandparents acquired many assets, including two homes, an RV, and substantial investments in the stock market.

• Military context: An asset is a piece of military equipment (like planes, ships, or installations) that is employed or targeted in a military operation. For example, the U.S. military targeted several foreign assets in training exercises.

For the purpose of this article, we’ll focus on the financial context of the word “asset,” as that is the most common way that the word is used.

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Examples of assets in the personal finance world

When it comes to personal finances, the word “asset” refers to anything that has monetary value. Examples of assets include:

• Money in a bank account

• Cash and cash equivalents (e.g., Treasury bills, money market funds, etc.)

• Stocks, mutual funds, and exchange-traded funds

• Vehicles

• Real estate

• Artwork and collectibles

• Cryptocurrency

• Gold and silver

• Coins

• Intellectual property, like copyrights or patents

If you own any of the above assets, they contribute to your personal net worth, which we’ll discuss more later on.

Examples of assets in the business world

Business assets can include many of the same examples of assets covered above, as well as some items and terms that are unique to the business world. A company’s balance sheet will show a record of all the company’s assets and is a key component of financial reporting for large firms. 

Here are some asset-related terms specific to the world of business and accounting:

• Capital asset: This refers to tangible, illiquid property that businesses use to generate revenue. Examples include equipment and vehicles.

• Current asset: A current asset is a high-liquidity asset — like cash and cash equivalents, accounts receivable, prepaid expenses, marketable securities, and other liquid assets — that a business could use to repay its debts or obligations.

• Non-current asset: This is a fixed asset held for long-term use by a business, like plants and equipment, or long-term investments like stocks and bonds.

• Tangible asset: This is an asset that has physical substance, like equipment, buildings, or business inventory.

• Intangible asset: Intangible assets don’t have any physical substance, like a patent on a technology, or a company’s reputation or brand recognition.

If you’re making investments and digging into a company’s financial statements, you may see some of these terms used. But if you’re more interested in learning about personal assets and how they affect your finances, then the terms above may not be very relevant for you.

Assets vs. liabilities (and your net worth)

So, assets are simply economic resources that have value. Financial assets include things like stocks, cash in a bank account, and your retirement account. Physical assets might include your vehicle, your home, and even small household items that have value.

The opposite of an asset is a liability, otherwise known as a debt. Assets increase your net worth, while liabilities (debts) decrease it. If you take out a loan, for instance, you’ve now increased your liabilities and decreased your net worth. Or if you pay off credit card debt, you’ve then decreased your liabilities and increased your net worth.

Net worth is one metric of your household’s financial health. To find your net worth, you simply add up the value of all your assets, then subtract the value of all your liabilities.

You can then track your net worth over time to see how it changes. You can even compare your net worth to the U.S. average, to see where you stand in comparison to other American households. 

What are liquid assets?

Liquid assets are things of value that can be sold easily. “Liquidity” refers to how easy an asset is to sell. A liquid asset is very simple (and fast) to sell, while an illiquid asset may be more difficult or slow to sell.

Examples of liquid assets include cash and money in a savings account. You could access funds from these assets instantly, making them “liquid.” Stock market investments would also be considered liquid, although they are slightly less liquid than money in a bank account, as you’d have to sell them during normal trading hours, then transfer the money to your account.

Liquid assets are fast and easy to access or sell, which makes them ideal for short-term investments and general savings. They can be accessed quickly in the case of a job loss, recession, or unexpected expense.

Examples of illiquid assets include investments in a friend’s small business and equity in your primary residence. While you could probably sell these assets, it would take more time to find a buyer — and there would likely be costs involved and steps to complete. That doesn’t mean that these options are bad investments, only that they’re harder to sell and, therefore, likely not ideal as short-term investments.

Why does it matter if an asset is liquid or not?

Assets can be sold to fund expenses. How quickly an asset can be sold (for a fair price) is important, particularly when it comes to unexpected expenses and emergencies.

It’s a good idea to have some savings in liquid assets, like in a savings account or money market fund. These funds can be accessed same-day, which can be important in situations such as unplanned expenses.

On the other hand, it’s fine to have some long-term assets in less-liquid investments. For instance, it can be helpful for your long-term financial well-being to buy real estate, even though real estate is far less liquid than money in a savings account (or even stock market investments).

Assets are an important part of your personal finances

An asset is simply something that you own that has economic value. Acquiring assets will help improve your financial security and increase your net worth. Both of which can contribute toward a brighter financial future.

If you have kids, teaching them about assets, debts, and other financial literacy topics can set them up for success. Fortunately, the Greenlight app makes it easy and fun, with the Level Up financial literacy game. Plus, Greenlight comes with a debit card for kids and teens, saving and investing features, and much more.