What it is
Financial assets are assets that aren’t physical but still hold monetary value based on a contractual agreement or ownership claim. Types of financial assets include savings accounts, stocks, bonds, and pooled funds.
Identifying financial assets helps differentiate them from real assets, which are tangible assets that get their value from physical qualities or real-world use, like a house or piece of land.
What it means for you
You own financial assets if you have money in savings accounts or time deposits, or have invested in financial markets.
Certain financial assets may allow you to earn money through capital appreciation (when the asset grows in value) or income (like interest from bonds and time deposits).
Having both real and financial assets may help you build wealth over time, though each type comes with its own sets of potential benefits and risks.
For example, financial assets tend to be more liquid than real assets. Liquidity can be important since it dictates how easy it is to exchange something for money.
Specific types of real and financial assets may also differ in terms of how much they may grow in value and how they might help you make money.
