A:

An asset is anything of value that can be converted into cash. Assets are owned by individuals, businesses and governments. Examples of assets include:

Assets are often grouped into two broad categories: liquid assets and illiquid assets. A liquid asset is one that can be converted into cash quickly with little to no effect on the price received. For example, stocks, money market instruments and government bonds are liquid assets. Illiquid assets, on the other hand, are assets that cannot be converted into cash quickly without substantial loss in value. Examples of illiquid assets include houses, antiques and other collectibles.

Your net worth is calculated by subtracting your liabilities from your assets. Essentially, your assets are everything you own, and your liabilities are everything you owe. A positive net worth indicates that your assets are greater than your liabilities; a negative net worth signifies that your liabilities exceed your assets.

RELATED FAQS
  1. Are stocks real assets?

    Learn why stocks are classified as financial assets, not real assets. Understand the properties that determine whether an ... Read Answer >>
  2. What items are considered liquid assets?

    Learn what a liquid asset is, some examples of liquid assets, what a non-liquid asset is and what determines whether as asset ... Read Answer >>
  3. Are current assets liquid or capital?

    Take a deeper look at liquid current assets for businesses and individuals, and learn how they differ from other types of ... Read Answer >>
  4. Can investments be consumed immediately?

    Learn about what immediate consumption means for assets. Find out how consumption impacts investing choices and planning ... Read Answer >>
  5. When are current assets converted to liquid assets?

    Understand the meaning of the accounting term ''current assets,'' and learn when and how current assets are converted into ... Read Answer >>
  6. When evaluating an individual's current financial status, liquid net worth would ...

    The correct answer is B). Total net worth is defined as all assets minus all liabilities. Liquid net worth is all assets ... Read Answer >>
Related Articles
  1. Investing

    Evaluating Your Personal Financial Statement

    Determine your net worth by making your own cash flow statement and balance sheet.
  2. Personal Finance

    How To Improve Net Worth By Decreasing Liabilities

    Here's an analysis of how to adjust liabilities and assets to improve net worth.
  3. Managing Wealth

    Assets That Increase Your Net Worth

    Your home, properties and vehicles can all increase your net worth.
  4. Managing Wealth

    What's an Asset?

    An asset is a resource with economic value.
  5. Investing

    Understanding Cash and Cash Equivalents

    Cash and cash equivalents are items that are either physical currency or liquid investments that can be immediately converted into cash.
  6. Investing

    Understanding Financial Liquidity

    Understanding how this measure works in the market can help keep your finances afloat.
  7. Managing Wealth

    Retirement Wealth: The Place of Tangible Assets

    When building a retirement portfolio, you need to determine how tangible assets fit with traditional investment products in your wealth-building strategy.
  8. Investing

    Liquid & Illiquid Assets

    The easier it is to convert the asset, the more liquid the asset is considered.
  9. Investing

    What is the Cash Ratio?

    The cash ratio is the ratio of a company's total cash and cash equivalents to its current liabilities.
RELATED TERMS
  1. Current Assets

    A balance sheet account that represents the value of all assets ...
  2. Liquid Asset

    An asset that can be converted into cash quickly and with minimal ...
  3. Financial Asset

    An asset that derives value because of a contractual claim. Stocks, ...
  4. Cash Asset Ratio

    The current value of marketable securities and cash, divided ...
  5. Illiquid

    The state of a security or other asset that cannot easily be ...
  6. Real Asset

    Physical or tangible assets that have value, due to their substance ...
Hot Definitions
  1. Universal Health Care Coverage

    An organized healthcare system that provides healthcare benefits to all persons in a specified region. Many countries, such ...
  2. Davos World Economic Forum

    The annual meeting of the World Economic Forum hosted at Davos—a small ski town in Switzerland—in January each year is among ...
  3. Smart Home

    A convenient home setup where appliances and devices can be automatically controlled remotely from anywhere in the world ...
  4. Efficient Frontier

    A set of optimal portfolios that offers the highest expected return for a defined level of risk or the lowest risk for a ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the ...
Trading Center