Asset

what is an asset

An asset is something that has ascertained importance in human life. It may be due to its utility in day to day life or inevitability in supporting our existence. The more we use a particular thing the more it becomes valuable to us. As a result of human activity every single day we are creating assets. However, there are only a few standardized known things to us that are known as assets. There are various types of assets and they have been classified into various types of categories.

what is an asset
Types of asset

Even there are many definitions of this term the website Investopedia defines it as a resource with economic value. A full definition can be read on the website.

Firstly let us look at money as an Asset, We use the money to buy things such as fruits & vegetables, pay salaries. We receive salaries or proceeds in the form of money when we work or sell something. We use money as a medium of exchange for almost everything. As a result, we can come to the conclusion that money is a vital asset.

Equity
Equity

Types of Asset

Based on the origin there are different types of assets and all the types of useful material can be classified into different categories. They are as follows.

  1. Property represents Land, Building, Construction etc
  2. Commodity represents ( Anything that comes out of Earth {Land & Oceans} – be it agricultural produce like cereals, oilseeds, fruits & vegetables, fisheries, metals, petroleum products etc )
  3. Equity represents ( A combination of one or more Commodities )
  4. Bonds represents ( A contract, a promise, Loan)
  5. Currencies represent a mathematical expression to end the double coincidence of wants (Paper, coins, cryptocurrencies)
  6. Insurance represents (risk pooling )
  7. Art represents ( Intangible aspects like branding, abstract, personality, reputation, music, creativity etc )
Options Trading
Stock Market

Relationship between Trading, Investment

Any type of trading or investment or exchange is only possible between different types of financial instruments. As you can see above every aspect that is near and dear to humans have been put into different categories of assets. Assets have a defined useful life cycle. Finally, when the useful life of an asset completes, it turns into a liability. In other words, everything is in sync with nature’s cycle. All the things begin with creation, prime, subsequently annihilation.

There are other types of classification of assets. For example –

  • Tangible
  • Intangible
  • Fixed
  • Current
  • Non Current
  • Operating etc

Finally, as there are many classifications, we are just going to focus only on the important ones. In other words, our base classification is sufficient to clear our doubts regarding types of assets. The other types of classification are not only utilitarian and contextual but also useless in clearing our concepts of assets in a broader sense. So we did two things that cleared our concept on this topic and also looked at the important types that are relevant.

Shoutout

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