What are assets?

In everyday conversations, people often mention ‘assets’ when talking about what they own, but in finance the term carries a more precise meaning. This article breaks down the asset definition, explains the different types of assets, and explores why they’re important – whether you’re managing personal money, running a business, or speaking with a debt adviser.

What is an asset?

In a financial context, an asset is anything that you own which has economic value and can be converted into cash, or used to produce value in the future. In other words:

• An asset is something that you can turn into money now or in the future (or derive benefit from).
• It is part of your net worth: your total assets minus your liabilities (what you owe) gives your net worth.
• Not everything you own qualifies – items with little or no resale value (for example, worn-out clothing or basic household items) may not count in practice.

Because the value of an asset depends on what someone would pay for it, asset valuations can change over time (for example, a car depreciates). The ‘asset definition’ in legal or financial terms often means what counts in your particular context – for instance, when assessing eligibility for a Debt Relief Order (DRO). 

Why assets matter

Understanding your assets helps you:

• Measure financial strength: The higher your asset base (relative to your debts), the stronger your balance sheet.
• Secure credit or loans: Lenders often look at your assets (or collateral) when deciding whether to lend.
• Plan for the future: Assets generate income, or protect you against emergencies (e.g. selling something of value).
• Navigate debt solutions: Some debt routes (like a DRO) examine your assets when deciding eligibility. 

Also, when you invest, you are choosing among types of assets, and different assets carry different risks, liquidity, and return potential.

Types of assets

There is no one fixed ‘list’ of asset types – financial textbooks and tax authorities sometimes categorise differently – but several broad categories are widely used. Below are the key types of assets you’ll often see discussed, along with some examples.

1. Current / liquid assets

These are assets that you can convert into cash (or spend) relatively quickly and easily, typically within a year. Common examples:

• Cash in hand
• Bank balances (current or savings accounts)
• Stocks, bonds or other marketable securities that can be sold easily
• Accounts receivable (if you run a business)
• Short-term investments (money market funds, short-term bonds).

2. Fixed / long-term assets

These are assets held over longer periods, not meant to be sold quickly, and often less liquid. Examples include:

• Real estate (houses, land, investment property)
• Vehicles
• Machinery, equipment, tools (for a business)
• Long-term investments (for instance, investments you intend to hold for many years).

Many fixed assets also depreciate (lose value over time), except for land, which may appreciate.

3. Tangible (physical) assets

These are physical items you can touch or see. Tangible assets may overlap with current or fixed assets, but the key is their physical nature. Examples:

• Buildings, property
• Vehicles, furniture, tools
• Inventory or stock (if you run a business)
• Precious metals, fine art, collectibles.

If you can physically hold it and it has value, it may qualify as a tangible asset.

4. Intangible assets

These are non-physical assets that carry value by virtue of rights, reputation, or intellectual property. Examples:

• Trademarks, patents, copyrights
• Goodwill (the value beyond the sum of tangible and recorded assets)
• Brand reputation
• Licences, franchises, software rights.

Valuing intangibles can be complex, because their market price is less certain and depends on future earnings or market perception.

5. Financial assets / investment assets

These are claims to future cash flows or ownership interests. Some overlap with current assets, but often they are held for income or capital growth:

• Shares / equities
• Bonds or debt securities
• Mutual funds, exchange-traded funds (ETFs)
• Pension funds
• Rights to dividends / interest.

These assets tend to be more liquid than tangible assets (depending on the market), but also subject to market risk.

6. Operating vs non-operating assets

In a business or investment setting, it’s sometimes helpful to distinguish:

• Operating assets: assets actively used in business operations (machinery, production facilities, intellectual property used to earn revenue).
• Non-operating assets: assets held but not central to daily operations (e.g. excess land, unused investments).
• Understanding this distinction helps business owners or investors see which assets generate core revenue, and which are surplus.

Putting it in context: personal finances

If you apply these different types of assets to your own finances, here’s what that might look like:

• Liquid assets: money in your bank accounts, readily sellable shares
• Fixed / tangible assets: your home, car, valuable physical items
• Intangible: brand or micro-business reputation, copyrights if you produce content
• Financial: any investments, pensions, funds
• Operating / non-operating: if you run a small side business, equipment used vs idle investments.

If you ever approach a debt solution (for example DMP, DRO or IVA), your income and your assets are considered. For some solutions, certain assets may need to be disclosed or may affect eligibility.

Tips on managing your assets wisely

• Record and review them
  Keep a clear list (with estimated values) of all your assets and liabilities. This helps you track net worth over time.
• Liquidity matters
  Always have some liquid assets (cash, easy-to-sell investments) so you aren’t forced to sell long-term assets in a crisis.
• Diversify your asset types
  Don’t put all your eggs in one basket – balance physical, financial and intangible assets to manage risk.
• Insure and protect
  For physical assets, use insurance and proper documentation (receipts, valuations). For property or collectibles, keep records safe in case of theft or damage.
• Understand depreciation and appreciation
  Recognise that some assets lose value over time (vehicles, tech gear), while others may appreciate (land, real estate, certain investments).
• Keep debt under control
  Be cautious about using assets as collateral – if you default, you risk losing them. Always consider the full implications of secured loans.

Understanding your assets

Understanding what counts as an asset and how different types of assets fit into your overall financial picture is a key step in taking control of your money. If you’d like to find out more, MoneyHelper offers free, impartial financial advice to help you make informed decisions. And if you’re worried about debt or unsure how your assets might affect your options, MoneyPlus advisers are here to guide you. Contact us to take the first step towards a more secure financial future.