Different factors determine our net worth. The most important of them all is assets. I am going to tell you everything you need to know about assets and why you need to start gathering as much as you can.
What are assets?
This is the first thing that everyone asks. Well, I will give you more than just an answer. Financially, an asset is anything with positive economic value that can be controlled to produce money of its worth. Take for example a car. It is an asset since it can be sold for some amount of money depending on its worth and other factors like how long it has been used.
Types of assets
Assets come in different types and forms. Broadly, they are either tangible or intangible. Tangible assets are those physical items with value, for example buildings and a piece of land.
Intangible assets on the other hand are not physical. They are considered as rights or resources adding value to you. These could be shares, copyrights or trademarks. We can also classify them as fixed or current assets. Fixed assets are those material things with value on them while current assets come in flows for like account balances.
Which assets are better?
All assets are important. It is good to have money in the bank but better to own a piece of land. Some assets tend to gain their value while others tend to lose it over time.
Money has delicate value. It might be high today and low tomorrow. Machines lose their value with time. If you bought a first hand printer last week and want to sell it today, will you sell it at the same price you bought it or higher? The answer is no. This is because the printer depreciated.
On the other hand, in most cases land and houses will always appreciate. All you need to do is spot the perfect location. Developments around a piece of land ensures that its value increases. If you bought a piece of land in a safe developing neighborhood today and decided to sell it later when the place is all developed, you will make an amazing profit.
It gets better if you build a modern house in it. This adds value to it. Take that as an investment. With time, it will increase your net worth. It is always better to acquire more assets that appreciate in value than those that depreciate. They ensure that your net worth increases over time. For companies and small businesses, acquire your own machinery. Its value will be higher as compared to a company that rents its machine.
Assets are as important as your insurance cover. We all need them. Since they say a lot about us financially, we should acquire as much as we can. Instead of letting all that money just stay in the bank, invest in an appreciating asset. It will be much later once you sell that house you bought. So as you determine how much you are worth, why don’t you approximate the value of all your assets?
We all want our family and friends to improve economically, don’t we. After reading this article, you can benefit your loved ones by sharing it. Post it on your face book account and let the everyone know. They will be thanking you later, and you will feel proud of yourself once you see them doing better.
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