Some people think that the money in their bank account is the only financial asset they have. The truth is that there are some types of financial assets. A financial advisor will also ask about all your assets before managing them. So, learn about it below and manage your assets well.
Cash versus Cash Equivalents
Indeed, the money in your bank account or you have is cash. Unfortunately, some people don’t know about cash equivalents. These two types are different.
Cash equivalent is the money you convert to short-term investment properties. It can be a savings bond and foreign currency. The most important thing is that you can reconvert the properties into cash right away in case you need it.
Having a cash equivalent is critical. The money can cover your urgent needs. So, check your assets now. Create a cash equivalent if you don’t have it yet. You are about to feel the benefits in the future.
Marketable Security Assets
You may also convert your money into marketable security assets. Indeed, it becomes one of your financial assets. Marketable security assets are an asset that can be converted to cash in the short term, such as within five years.
Say you are converting your money into cryptocurrency. The virtual coins you have are your marketable security asset. Gold is also a popular marketable security asset.
You can sell the gold you have for at least three to five years. This asset also helps in case you need cash urgently. During the process, you may earn a return and protection on your capital.
Inventory Asset
You may not realize yet that you also have an inventory asset. It is a common thing for business owners. This asset includes the products you are about to sell, supplies, and even raw materials. As long as you think you will be selling the products or items before a year, it can be listed as your inventory assets.
Prepaid Expense Assets
You pay for your insurance plan, right? Surprisingly, it is also considered as your asset, although you spend money on it. The point is that you are about to get benefits from the insurance program.
Say you are hospitalized and you have a health insurance program. The insurance will cover the medication bills. That’s why your insurance is classified as a prepaid expense asset.
Now, you finally understand that your financial asset is not only the money you have in the bank account. You may have different types of financial assets that are not in the form of cash. It will be better if you are classifying the assets for better financial management and planning.
