What it is
Real assets are things that can be touched and have value because of their physical qualities or real-world use. Examples include real estate, land, precious metals, and natural resources.
In contrast, financial assets like stocks and bonds are intangible assets that hold value based on a contractual agreement or ownership claim.
What it means for you
For investors, buying and selling real assets can be an option for growing wealth. Note that investing in real assets comes with pros and cons.
On one hand, real assets – especially real estate – tend to have a stable, long-term value. Their steady growth may help protect against the effects of inflation.
Additionally, some real assets help generate income. You can earn from renting out property or operating a fleet of vehicles.
On the other hand, it can be more expensive to buy real assets than financial assets. For example, a company’s shares can be way more affordable than a house.
Real assets also tend to be less liquid than financial assets since they can be harder to sell quickly.
If you have enough capital, investing in both real and financial assets may help you manage risk and improve the growth potential of your overall portfolio.
