Hey, readers welcome back. Today you are going to read about 5 types of assets you should be aware of at an early age to create wealth in the long term. Let’s get started.
We already know about what is an asset. In simple terms, assets are something that puts money in your pockets. To know in detail, read my previous article on Assets vs Liabilities at https://www.mintpaisa.com/assets-and-liabilities-how-this-affects-your-life/. Now let us see various kinds of assets and how they are further classified into.
The tangible assets which have economic value when exchanged are called Physical Assets.
When we think about assets first one that gets into our brain is real estate which includes residential, commercial, vacant land and Industrial real estate. If you have a residential area by renting it out you can generate income continuously. But before buying that real estate you should observe the future demand of that locality.
If you know about how the 2008 financial crash happened in the USA and how it affected all countries, then you would definitely don’t dare to invest in real estate. But you have to take consideration of how the huge amount of wealth that was created due to real estates after the crisis. The land is the only asset that has the power to increase its value over time because of rapid population growth.
What is a Commodity?
The commodity is goods or service which can be interchangeable and each of them is different from others. You can read about this in detail by clicking this link https://en.wikipedia.org/wiki/Commodity.
Commodities are actively traded on commodity exchanges. In India MCX and NCDEX handles commodity trading. We will deal about trading in my later posts. For now, let us stick to the basics.
How Commodity can generate Wealth?
There are different types of commodities like cardamom, palm oil, cotton etc., which are usually called as agricultural commodities. Along with these, there base metals like zinc, aluminum etc., are also called as commodities. But one we should concentrate on is precious metals like gold and silver. These are the two metals which have their presence for more than a few thousand years. Over a period of time, gold has the capacity to multiply in its value. Here is an example – In 1973 the price of 1 kg of gold is around $ 2086. Now the current value as of March 2019 is $ 42324. In my view, gold is the king of all assets.
We have covered about Real Estates and Commodities. Now let us talk about our final physical asset which a very few aware of.
Collectables are kind of antique items which have a lot of value in the current world. Only a few use collectables as an investment. They store the things which they feel like can grow in value with time. Some invest in antique cars, fine arts, coins, etc., Along with these, another kind of product that increases in value with time is WINE. A good quality wine which was stored for a long time will have a good demand in the market. Next week I am going to publish an article which explains complete procedure about wine investment.
So far I have discussed three forms of assets i.e, Real Estate, Commodity, and Collectibles. I don’t want to make this article long one so I divided it into two parts. In Part 2, I will discuss the remaining two important assets Equity and Debt.
To get a complete overview of this article read PART2