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Fincash » Real Asset

Defining Real Asset

Updated on April 11, 2024 , 1244 views

As per the real assets meaning, these are denoted as physical assets having some intrinsic worth because of the overall properties as well as substance. Real assets are known to include commodities, precious metals, equipment, Real Estate, natural resources, and Land.

These are known to be highly appropriate for inclusion across most of the diversified portfolios. This is primarily because of the relatively lower correlation with the respective Financial Assets –including Bonds and stocks.

An Insight into Real Assets

Assets can be categorized in the form of being intangible, financial, or real. All the given assets are known to have some Economic Value to an individual or a corporation. If the same has some value that could be exchanged for cash, then the item can be referred to as an asset.

Intangible assets can be regarded as some valuable property that does not tend to be physical in nature. These assets are known to include copyrights, patents, trademarks, brand recognition, intellectual property, and others. For a business enterprise, one of the most vital intangible assets could be the positive brand identity.

Financial assets can be regarded as some form of liquid property that is known to derive value from ownership claim or contractual right. Mutual Funds, bonds, stocks, good old cash, investment accounts, and Bank deposits are all common instances of financial assets. They could indicate some physical form –like a bond certificate or a dollar bill, or could be non-physical –like in the form of mutual funds or the money market account.

On the contrary, the real assets tend to feature a tangible form. These are known to derive the respective values from the physical qualities. It could indicate some natural substance –like oil or gold, or even the non-natural or manmade ones –like building or machinery.

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Special Considerations

Real and financial assets are collectively referred to as the “tangible assets.” For the purpose of tax filing, the IRS or Internal Revenue Services expect businesses to report the respective intangible assets separately in comparison to the tangible assets. However, it also helps in grouping financial & real assets under the umbrella of the tangible asset.

Most businesses out there are known to own a comprehensive Range of assets. All of the given assets are eventually going to fall under the categories of intangible, real, or financial assets. Real assets –just like financial assets, are regarded as tangible assets. For instance, assume that an ABC company owns abundant inventory, a fleet of cars, and various equipment. These are regarded as real assets. At the same time, the organization is also known to own multiple copyrights and trademarks. These are regarded as intangible assets. Finally, the organization also owns some shares of stocks in some sister company. Then, these are regarded as financial assets of the company.

Disclaimer:
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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