Tangible Assets Definition
Tangible assets are physical items or structures that can be touched. These include property, equipment, metals used in industry, and money in the form of cash. On a personal level, tangible assets might include clothing, books, furniture, appliances – all the things that make up what we typically think of as “stuff.”
Types of Tangible Assets
Tangible assets can be broken down into three major categories: fixed, current, and financial.
Fixed Tangible Assets
Fixed tangible assets are those that could require a long-term investment before you see any return on your money; examples include machinery and vehicles.
Current Tangible Assets
Current tangible assets are those that are typically used within the year after they have been purchased; examples include office equipment and inventory.
Financial Tangible Assets
Financial assets may not require an initial investment, but you should expect to see little return on your money because these assets can be easily turned into cash; examples include stocks, savings bonds, and treasury bills.
The Difference Between Tangible and Intangible Assets?
Intangible and tangible items and structures do not share much in common. That is, what we experience as intangible — ideas, thoughts — does not exist in the physical realm; what we experience as tangible — a house, a piece of furniture — exists in the physical realm. Intangible assets may not have a physical presence but they can be represented by a physical item. Examples include patents, trademarks, and copyrights.
Why Do People Invest in Tangible Assets?
If what is meant by “tangible assets” is what you can touch, what you can feel, what exists in the physical world, then people invest in these things because they want to own them. They want to possess and experience and live with and through what they buy. These items are what you can put in your home, what you can buy to take out for golfing on the weekend, what you might wear to look great at a party or an event.
How Can You Tell if an Asset Is a Good Investment?
An asset is what you own that has value. It could be liquid or not liquid. Liquid assets are what you can sell for cash relatively quickly, like stocks and bonds. Non-liquid assets take longer to turn into cash, like antiques or your home. Tangible assets can be an investment if what makes up that asset has value. For example, a museum-quality print will hold its value and you can sell it at some point for what you paid for it; however, if the print is only worth $50 and you bought it for $100, what you’ve really created here is an expense. Sole proprietorships are examples of assets that are good investments because what makes up the asset, what is bought and sold, has value – it’s how you make your money. You can sell what you’ve created with what you’ve invested in, whether that product is a service or an item. Is Your Job Considered An Intangible Asset Or A Tangible One? Your job is what you contribute on a regular to what makes up that company. If what is used by the company can be purchased and what is produced can be sold, what you contribute has value. So if what is made by what you do for your employer, what you provide as part of your professional life, what is created through what you put in – all of these things are intangible assets.
Some Examples of Intangible and Tangible Investments
Examples of intangible investments are what you can spend on tuition or what you can invest in your retirement plan. These assets may not hold their value but what they provide is worth more than what was spent to gain it, like a good education or financial independence later in life. Examples of what would be considered tangible investments are what you purchase to decorate your home or what you put on your body. If what you buy is nice, perhaps expensive, it may not hold its value but what it provides is worth more than what was spent to gain it, like a designer handbag or a new car. If what is bought does not hold its value, what you have with what you’ve invested in is an expense. For example, what if what was bought never breaks and provides no pleasure? What if what was bought was a car that always needed work but didn’t actually go anywhere because it never ran properly? In this case, what you’ve done is spend what you had to get what was essentially worth nothing.
The difference between what is intangible and what is tangible, what holds value and what does not, what represents an investment, and what represents an expense – these are things that we were talking about in this article. We invest in what we consider to be worth the cost, what we think will help us make our lives better or more beautiful or comfortable. We spend what we have in order to get what we want, what will help us achieve what we see possible. Timeless questions related to what makes for an investment and what makes for an expense are what people continue to wonder about today. What assets are worth investing in? These assets can be intangible or tangible; they can be bought and they can be sold. What assets will provide what value and what is simply an unnecessary expenditure? What you invest in, what makes up what you own and what helps to make your life better – this is what matters to you.
About the Author
True Tamplin, BSc, CEPF®
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.