What is an asset and how to take care of them?

It is pretty hard to answer the question, what is asset, because the term ‘asset’ engulfs so many different things, some which can be seen and some that cannot be seen. Sounds vague, right? Lots of people have come up with different definitions for the word asset; the simplest of them says ‘anything owned that has exchange value is an asset’.

Assets are mainly differentiated into tangible assets and intangible assets. It is simpler to know what tangible assets are, they are in physical form and you can see them. Whereas intangibles are not visible but have immense value like the reputation, goodwill, trademark, the work force, the expertise, and even the location of a company. The intangible assets that a company possesses pushes up greatly its worth in the market.

Tangible assets can further be bifurcated into liquid assets or current assets owing to their simple liquidity. Examples of current assets are cash, deposits held in banks or other financial institutions, shares, bonds, stocks, and a host of other such easily liquidated assets. Long-term assets are as the name suggests assets that are retained for long terms such as real estate, plant and machinery or other equipment that take some time and effort to be liquidated.

Tangible assets can also be differentiated as movable assets and immovable assets. All assets that are not fixed permanently are termed movable, for example vehicles, gold and jewellery, paper money, etc. Immovable assets are those that cannot be went like land and building, plant and machinery that are embedded in the earth, etc.

How do we protect our different types of assets and safeguard our interest? You are right, its not enough to just buy assets, they have to be protected and taken care of in an appropriate manner to ensure that their value increases with time.

Cash and precious metals like gold, silver, diamonds and other gems and stones are to be protected by keeping them in lockers and jewellery to be adequately insured against theft. Landed property is to be safeguarded from encroachment and buildings require periodic maintenance like painting, repairs, etc. to ensure that their value does not drop. No one want to pay a excellent amount to a building that looks dilapidated with unkempt garden and peeling paint. Likewise the taxes for real estate has to be paid as and when due to avoid them being taken over by the government agencies towards dues payable to them.

Plant and machinery, autos and other equipment have to be serviced at regular intervals and properly maintained. Prompt payment of taxes and licenses are vital. Of course, but well they are maintained they face depreciation in their value with every passing year, but once they become antique pieces their value reaches the sky!

When we talk of shares and mutual funds, we should be aware of the inherent risks in these assets and this needs constant follow up to avoid pitfalls.
Now that you know what an asset is you should be able to plot wisely and buy assets and also protect them from deterioration in value.