What are Assets you ask?
You have probably heard this term before or read it in a complicated Financial Book where the author assumes that you are already on their level.
In the simplest terms, an asset is an entity or anything of value that is or can be converted into cash. Examples of assets are cash, checking & saving accounts, real property, personal property (collectibles, jewelry, vehicles, Investments (stocks, bonds, pension, 401k) & etc .
The most important thing to understand about assets is what category they fall into: Liquid or Illiquid. Because, it’s good to have both type of assets for a strong powerful balanced Portfolio. If you end up in a Financial emergency and need cash quick, then you can sell one of your assets and get the money in a hurry. On the other hand, Illiquid assets cannot be converted without substantial loss in value to them. For example, technically your rare collectible Jordan’s can count as asset, BUT if you need to sell them and need cash, you will take a high and probably wont get them for the same price you purchased them. Think of illiquid assets, as assets that you hold on too and have the potential to grow in value as time goes on. So when you want to retire or invest in another project down the road and need some capital (money to fund the project) you can finally convert that illiquid asset into some cash. The substantial loss in value wouldn’t be that bad.
Examples of Assets & the category they fall into:
|LIQUID ASSETS||ILLQUID ASSETS|
|Cash||Houses, Property, Land|
|Investments (Stocks, mutual Funds, bonds)||Art/Antiques/Collectibles|
|Government Bonds, CD’s (certificate deposits), Money market accounts||Businesses|
|Coins, Gold Bars, Currency from Other Countries||Vehicles|
How do Assets Benefit you?
Very simple, if you want to be filthy rich & wealthy, YOU NEED TO ACQUIRE AS MANY ASSETS AS YOU CAN! Assets are the “major key” to Financial Freedom. The more you have, the better. This is literally one thing that you can never have too many of. An asset only job is to make you more money and wealthier. Think about your favorite millionaire or Billionaire that you like, I bet you that you have hundreds or thousands of assets in their possession because these are the things that got them to millionaire/billionaire status.
The Best thing about assets, is that you don’t have to be rich to obtain them. YOU CAN START ACQUIRING THEM NOW! If you can save S20 bucks, you can buy an asset today. For example, I personally started saving $20 bucks as week, for one month, and I invested the money into acquiring stocks. And Yes, you can buy stocks now starting with only $20. Remember, a stock is an asset. Now I can sound smart among my peers, say that I own stock and have a few shares in Coco-Cola; which is true! Buying stocks will be another topic that we will get into later.
The point that I want to leave you with is to start researching more in depth of what assets are, know that they are attainable no matter where you are in your financial journey and how you can start acquiring them today!